Gold Awaits NFP, But It's Really All About The Dollar
(Kitco News) - U.S. nonfarm payrolls areback and gold is under pressure, but one analyst says the focus should be onthe U.S. dollar when it comes to gold’s next move.
“The gold market wentsideways during yesterday’s [Thursday’s] session as the market is looking forclarity in the movement of the dollar index,” noted Colin First of FX Empire ina post Friday.
“We would have expecteda much larger push in the gold prices through the $1,345 region and towards theprevious highs at around $1,360 but so far, that has not happened,” headded.
The gold market nowawaits the Labor Department’s employment data on Friday, with spot gold lasttrading at $1,345.25, down $3.10 on the day.
“The market seems to be waitingin anticipation of further data from the U.S. before deciding which way itwants to move and that is the reason for some choppy action near the highs overthe last couple of days,” First explained.
However, it is reallywhat will happen to the U.S. dollar following the release of the data that willbe more important to watch. Consensus forecasts are calling for about 177,000jobs to have been created in January. The unemployment rate is expected to beunchanged at 4.1%.
“This piece of data islikely to be very important in the larger scheme of things as far as the dollaris concerned,” he wrote. “The dollar has been battered over the last month orso as the expectations of the market have been minimal. But with the dataimproving over the last couple of weeks, it looks as though we might see abounce in the dollar pretty soon.”
The U.S. dollar indexis down 3.7% so far this year, with the spot index last trading at 88.849.
“The market is alreadyin the process of pricing in three rate hikes from the Fed for this year and itwould hope that some good incoming data would push the Fed into making fourrate hikes,” First added.
By Sarah BenaliFor Kitco News
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