Gold Commentary - Friday, May 3

Gold Softer on Friday

Gold prices are trading a little softer on Friday as traders brace for the latest set of US labour market readings. The last three months’ worth of NFP results have each surprised to the upside, keeping USD well bid consequently. With the labour market continuing to show robust growth and inflation remaining elevated, traders have scaled back their near-term Fed rate cut expectations with initial easing projections moved to September from June originally. If we see further strength in today’s readings there is a good chance we start to see pricing for September easing weaken, creating further demand for USD near-term weighing on gold prices.


Forecasts for Today

On the numbers front today, the market is looking for the headline NFP to come in at 238k, down from 303k prior. While a clear decline, if seen, the number is still strong and unlikely to weigh on USD unless we see a drop in wages too. Wage growth expected unchanged at 0.3% and the unemployment rate expected unchanged at 3.8%. Gold bulls ideally need to see an undershooting of the NFP forecast today, with a drop in wage growth too. On the other hand, if we see any upside surprises today this will no doubt cast some uncertainty over September easing, sending USD higher and gold lower near-term.


Technical Views



The rally in gold has stalled for now on the break above 2364.93 with price since reversing back below the level, now back inside the bull channel. 2221.39 will be the next support to watch with deeper support at 2149.72, where the channel lows lie. Bears will need to see a break of this region to bolster chances of a trend reversal lower. 

(Click on image to enlarge)


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