NFP Preview: Gold Price Could Be Vulnerable On Strong Jobs Report

Summary:

Gold price could be vulnerable if there is a strong NFP report, as TDS securities also expects a firmer NFP to seal a November tapering date.

Friday 7 October sees the US Non-Farm Payrolls report, which details the state of public sector employment (minus agricultural sector jobs). Wednesday brought a strong showing on the private sector side of things; can the NFP equally deliver?

Strong jobs numbers tomorrow will seal the tapering announcement for November, according to researchers at TDS Securities. The analysts think that the payroll signals for September are mixed. Still, they ultimately expect the US Dollar to retain its firm tone against funding currencies if the data beats expectations slightly.

Underwhelming payrolls could produce shallow dips in the USD, they say.

Gold Price Trade Playbook

The forecast is for an employment change of 490K versus the previous of 235K, with a slight drop in the unemployment rate from 5.2% to 5.1%. Gold prices (XAU/USD) could be rendered vulnerable if the payrolls numbers exceed expectations by a mile.

A look at the daily chart shows that traders have been shorting gold around 1763.30, subduing any attempts at breaking this resistance. A surprisingly upbeat NFP report opens the door for bears to build on these shorts and drive the gold price lower, targeting 1741.01 and potentially 1719.13.

On the other hand, a weak number could allow the bulls to take out 1763.30, targeting 1789.49. initially. 1800.00 and 1815.20 remain additional targets to the north. If the market expectations are met, we could see the price ranging between 1750.00 and 1770.46.