Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Price to be Driven by Non-Farm Payroll Data

Commodities / Gold and Silver 2015 Mar 04, 2015 - 10:49 AM GMT

By: Submissions

Commodities

Harley Salt writes: Friday will see the release of the much anticipated monthly US Non-Farm Payrolls figures. Even more so than in previous months this data will be influential in setting the direction of the gold market between its release on Friday and the next Federal Reserve policy meeting on set for 17th and 18th March. It is the only major market moving data due out before the Fed meets so it will be the focus of not just traders but also the Fed itself.


Gold traders will be going over all the Non-Farm Payroll data due out, not just the headlines, with a fine tooth comb as they look to for any indication as to when the Fed will start raising rates for the first time since June 2006. It is not a matter of will the Fed move rates higher, it is a matter of when and by how much. Is the Fed going to go early such as June and move higher over a drawn out period of time, or are they going to move late such as the last quarter of 2015 or early 2016 and at a much quicker, steeper pace? What we do know is the Fed has said it is patient, however we read that as it will not move in the next few months.

Traders will be looking for any signs in the Non-Farm Payroll data that will give a clue on when the Fed will increase rates. Strong data will give the Fed a reason to move early on rates, while any weakness could be seen as a sign the Fed will wait until later in the year to increase rates. Either way, this Friday is going to be key in the short term to how the Fed plays its rate cards at the upcoming meeting.

The Non-Farm Payroll data on Friday should confirm to us that the US economy is continuing to improve, however we do see significant headwinds ahead for the US. With equity markets in the US such as S&P 500, Russell 2000 and Dow Jones all hitting record highs in recent days, along with the Nasdaq hitting levels not seen since the dot com bubble and bond yields sitting at record lows we do not think it will take much for a market correction to occur.

If the Non-Farm Payrolls are strong also expect to see the US dollar trade higher and the price of gold to dip, this could provide a good buying opportunity for those looking for the price of gold to increase over the next 12 to 18 months. A strong US dollar is going to hinder growth in the US by making US exports more expensive, not to mention the impact it has on a number of countries, particularly emerging ones feel when the US dollar which is already strong gains even further. A lot of these countries have debt denominated in US dollars. A strong US dollar that is increasing in strength, coupled with much weaker oil prices is going to cause havoc for a number of these countries. While it may not mean much to the global economy if one or two of these emerging countries defaults or requires a bailout, if it happens to a number of countries within a short period of time this could cause a much bigger issue for the world’s economy.

Any sign of weakness in the Non-Farm Payroll data is going to play into the hands of gold, if it appears that the data is not as strong as the market is expecting then expect investors to be adding gold to their portfolios. Uncertainty is good for the price of gold given it is the leading go-to investment when financial markets risk increases. Keeping rates at low levels also reduces any opportunity cost associated with keeping funds in gold, which does not earn interest, instead of in a term deposit. 

The consensus for Non-Farm Payroll jobs growth in February according to Econday is for an increase of 230k jobs, while unemployment is forecast to fall from 5.7% to 5.6%. 

The growth in average hourly wage is expected to increase by 0.2% for the month, putting the yearly gain at only 2.1%. The Fed is really looking for strong wage growth to be added to the equation before they begin lifting rates, so investors should be paying close attention to the average hourly wage growth in the figures on Friday. Also of interest should be the labor force participation rate, this is really a great indication or bellwether on how people view the state of the economy.

The Non-Farm Payroll data is going to be hugely important to gold sentiment over the next couple of weeks as we head into the Fed’s policy meeting. With gold range trading at the moment, we suggest to clients to buy on dips below US$1,197oz.

Courtesy of:  www.BullionIndex.com.au 

Harley Salt is co-founder of www.BullionIndex.com.au a physical gold, silver and platinum trading and investing company located in Melbourne, Australia.


Bullion Index offers direct market access to 15 global physical bullion exchanges and storage facilities in key locations including London, Zurich, New York, Hong Kong, Singapore, Dubai and Sydney. Their clients from across the globe can trade bullion bars and investment grade coins simply and securely via the MetalDesk online trading platform.

© 2015 Copyright  Harley Salt - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in