After the 9-day downward streak towards the psychologically important $1800, gold is now trying to consolidate around the lower $1800 region.

The US initial jobless claims reading, released yesterday (Thursday, Oct 5th) came in lower-than-expected at 207K (vs 210K forecasted), reinforcing XAUUSD bull’s concerns of another Fed interest rate hike this year.

Investors now factor a 18.5% & 35.8% chance of another rate hike in November and December, respectively.

Incoming US jobs report may yet jolt bullion

XAUUSD bulls are now going to hold on to the unemployment data, to be released later today, as the next catalyst for what could be gold’s next big move.

• Nonfarm payrolls are expected to decrease to 170K in Sep. (from 187K in Aug.)
• The unemployment rate is expected slightly lower at 3.7% in Sep. (from 3.8% in Aug.)

Stronger-than-anticipated employment readings may amplify the likelihood of another Fed rate hike this year, which could potentially lead to a further decline in interest in zero-yielding gold.

As of today (Oct. 6th), the SPDR (the world’s largest gold ETF) has experienced a ~$1.8 billion decline in net asset value within the last week.

On the other hand, weaker-than-expected job prints that deter the Fed from another rate hike may offer limited relief for the precious metal.

Gold’s upside should remain capped as long as markets take heed of the Fed’s “higher-for-longer” message.

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