Gold price ticks higher ahead of US Nonfarm Payrolls report
Gold price (XAU/USD) recovers intraday losses and edges higher to around$2,640 in European trading hours on Friday ahead of the United States (US) Nonfarm Payrolls (NFP) data for November, a key release to get more cues about which direction US interest rates could be heading to.
The impact of the US labor market data on the Federal Reserve’s (Fed) likely interest rate action in the policy meeting on December 18 will be significant as officials became more focused on preserving labor demand when the central bank started reducing its key borrowing rates in September. The data will be released at 13:30 GMT.
According to the CME FedWatch tool, there is a 72% chance that the Fed will reduce interest rates by 25 basis points (bps) to 4.25%-4.50% this month, while the rest supports leaving interest rates unchanged.
Lower interest rates are positive for Gold because they reduce the opportunity cost of holding the non-interest-paying asset.
Economists expect the US economy to have added 200K fresh workers, significantly higher than 12K in October. The prior month’s NFP report stated that payroll employment estimates in some industries were affected by the hurricanes. The Unemployment Rate is estimated to have increased to 4.2% from 4.1%.
Investors will also pay close attention to the US Average Hourly Earnings data to get cues about the current status of wage growth. The measure is estimated to have increased by 3.9%, slower than 4% in October, on a year-on-year basis.
Ahead of the US NFP data, the US Dollar Index (DXY) – which tracks the Greenback’s value against six major currencies – holds the key support of 105.70. Meanwhile, 10-year US Treasury yields rise to nearly 4.19%.
Source: Fxstreet
