Gold Rises as the Dollar Weakens Ahead of U.S. Nonfarm Payroll Data

Gold prices went up slightly on Wednesday on a weaker dollar. The greenback dropped near recent troughs and made the yellow metal less expensive for investors using rival currencies. However, the bullion was still trading on a narrow range as market participants wait for July nonfarm payroll data.

The Gold Analyst

Spot gold is currently trading at $1,814.72 per ounce as of 0750 GMT.

Jeffrey Halley, a senior market analyst at OANDA for the Asia Pacific, said the precious metal appears to be in a wait and see mode. The price actions remain structurally positive, and the moving averages indicate a breakout, Halley explained. He predicted an upward price trend and suggested that the release of U.S. employment data on Friday could be the catalyst.

Nicholas Frappell, the global general manager of ABC Bullion, added that the market sentiment is currently slightly bullish. He noted that bullion price is performing well above technical support levels. Frappell sees an intraday resistance price level at $1,816 and then at $1,827.

Payroll processor ADP will release its National Employment Report later today. Some experts believe it could provide clues for the much-awaited U.S. nonfarm payroll data. Most of them expect a surge in July employment.

However, available high-frequency data suggest that hiring slowed down in states with a high number of COVID-19 Delta variant infections and those that ended federal unemployment benefits. Analysis showed that work shifts declined by 50% after state governments stopped providing unemployment benefits.

Also, U.S. Federal Reserve Governor Michelle Bowman commented that it would take time for the labor market to recover from the effects of the pandemic. San Francisco Federal Bank President Mary Daly added that almost ten million Americans are still unemployed. The employment rate is one of the main factors considered by the Federal Reserve in determining its monetary policy.

Meanwhile, the Commerce Department reported that factory orders increased by 1.5% in June. It suggests the sustained growth of the manufacturing sector despite the shifting in spending from goods to services.

In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust (GLD), dropped by 0.2% yesterday to 1,027.97 tons.