Gold Prices Poised for Volatility Ahead of U.S. Jobs Report
On Friday, during the early Asian market, spot gold remained stable, hovering near $2,358 per ounce. This trading day, gold traders are keenly focused on the U.S. non-farm payrolls report, which is anticipated to cause sharp fluctuations in the gold market. Additionally, remarks from New York Fed President Williams are also on the radar.
On Thursday, gold prices were in consolidation mode ahead of the key U.S. jobs report for June. This followed a two-week high of $2,365 per ounce touched on Wednesday. Spot gold edged up slightly by 0.03% to close at $2,356.90 per ounce on Thursday.
Investors are awaiting the U.S. June nonfarm payrolls report, set to be released at 20:30 Beijing time on Friday. June nonfarm payrolls growth is expected to show a significant slowdown compared to the previous month. Authoritative surveys predict an increase of 190,000 in June, following a rise of 272,000 in May, with the unemployment rate expected to remain steady at 4.0%.
Investors will also scrutinize payrolls data, with the year-on-year increase in U.S. average hourly wages expected to fall to 3.9% in June from 4.1% the previous month, marking a new post-pandemic low. On a monthly basis, average hourly wages are anticipated to rise 0.3% in June, down from 0.4% in May.
Matt Simpson, senior analyst at City Index, noted that the weaker-than-expected ISM services report could be a prelude to a bullish scenario for gold. If the nonfarm payrolls report confirms signs of economic weakness, gold prices are expected to rise to $2,400 per ounce. The ISM non-manufacturing index fell to 48.8 in June, the lowest since May 2020, indicating a contraction in the service sector.
Christopher Lewis, market analyst at FX Empire, suggested that any dip in gold prices following the nonfarm payrolls report should be viewed as a buying opportunity. New York Fed President Williams, who holds a permanent vote on monetary policy, will speak later on Friday. Williams has previously stated that the U.S. economy is moving in the right direction but has been non-committal about the timing of rate cuts, emphasizing that decisions will depend on new economic data.
FXStreet analyst Christian Borjon Valencia highlighted that gold prices consolidated on Thursday due to light market volumes. While gold maintains a bullish outlook, a head-and-shoulders pattern that has been forming since April 2024 suggests a near-term downward bias. However, the overall bullish trend remains supported by a positive Relative Strength Index (RSI).
Valencia indicated that if gold breaks above the neckline of the head-and-shoulders pattern, it could rise to $2,400 per ounce, potentially reaching a yearly high of $2,450 per ounce. Conversely, if gold falls below $2,350 per ounce, it could drop further to $2,300 per ounce, with subsequent support levels at $2,277 per ounce and $2,222 per ounce.
Economies.com noted that gold traded within a narrow range on Thursday, maintaining a bullish outlook as long as prices stay above $2,340.10 per ounce. The first target for gold is a break above $2,365.00 per ounce, paving the way for a move to $2,400.00 per ounce.
