Gold and NFP: The Moment of Truth

#XAUUSD

Key zone: 3,450.00 - 3,550.00

Buy: 3,500.00 (on a pullback after a correction); target 3,650.00; StopLoss 3,420.00

Sell: 3,420.00 (after a strong breakdown of 3.450); target 3,250.00; StopLoss 3,500.00

Gold is once again in the spotlight – investors are preparing for the release of the NFP report, which traditionally sets the tone for the markets on the first Friday of every month. This figure has become a key indicator of the U.S. economy and directly affects the dynamics of the dollar, yields, and gold prices.

It may seem strange that plain job numbers can influence billions in gold capital, but NFP is a fairly honest mirror of the American economy. If NFP records job growth, the dollar strengthens, yields rise, and gold corrects. Weakness in the labor market, on the other hand, leads to dollar instability and a capital inflow into safe-haven assets.

After reaching a record high of $3580 per ounce, gold corrected slightly, but since the start of the year the metal has gained nearly 37%. This reflects the market’s drive for protection and investors’ willingness to pay a premium for stability – and to pay in gold.

The main driver remains expectations of a Fed rate cut. The probability of a 0.25% cut is assessed at 97.5% by the market. However, the scope and speed of dollar weakness will be determined precisely by the NFP report.

Reminder: For the Federal Reserve, the main formula is “inflation + employment.”

Possible scenarios:

• Strong NFP (>120K) with unemployment around 4.2%: dollar strengthens, gold declines to $3450–3500.
• Weak NFP (~73K) with unemployment rising to 4.3%+: market sees a cooling economy, dollar falls, gold rises to $3600–3650 and higher.
• Average result (~75K) with stable unemployment: gold consolidates in the $3500–3550 range.
• Better than expected NFP with unemployment falling: gold corrects to $3400–3450, dollar strengthens.
• Both indicators disappoint (weak NFP and rising unemployment): Fed gets a signal for further easing, gold rises above $3650–3700.

In the Asian session, gold failed to extend gains, with prices remaining near the historical high reached earlier this week. Bets on a near-term Fed rate cut keep the dollar bulls from aggressive positioning, creating support for gold.

The current situation calls for caution. Expectations that the Fed will cut rates later this month keep U.S. dollar bulls from aggressive moves and act as a tailwind for gold.

So we act wisely and avoid unnecessary risks.

Profits to y’all!