Gold Price Fundamental Daily Forecast -Traders Leaning to Short Side Ahead of Friday’s NFP Report

Gold futures are trading lower on Thursday while continuing to edge closer toward the psychological support at $1700.00. The selling pressure continues to be driven by expectations of aggressive rate hikes by global central bankers as they try to harness heightened inflation.

At 11:49 GMT, December Comex gold is trading $1713.70, down $12.50 or -0.72%. On Wednesday, the SPDR Gold Shares ETF settled at $159.28, up $0.01 or +0.01%.

Gold has been under pressure since March when the Federal Reserve brought an end to the easy money cycle with a 25-basis point rate hike. Since then the market has dropped more than $350 since edging above the $2000.00 level. According to Reuters, this is the longest streak of monthly losses since 2018.

Once again it’s rising Treasury yields and a stronger U.S. Dollar driving the price action. However, volume is on the light side with many of the major players on the sidelines ahead of Friday’s U.S. Non-Farm Payrolls report.

Although we could see periodic short-covering rallies, it seems the heavy lifting is just getting started with Fed Chair Jerome Powell last Friday vowing to get inflation under control even if it means pain for businesses and consumers.

Rising 2-Year Treasury Yields Keeping Pressure on Gold Prices

The 2-year U.S. Treasury yield hit a nearly 15-year high on Thursday after ADP data the day before showed a significant slowdown in private payroll growth.

The yield on the short-term note hit a high of 3.516%, the highest level since November 2007, at one point Thursday. It was last trading about 3 basis points higher at 3.487%. Meanwhile, 10-year Treasury yields are up 6 basis points at 3.20% and the yield on the 30-year Treasury bond gained 6 basis points to reach 3.318%.

Wednesday, a jobs report from payroll processing company ADP showed U.S. private payrolls grew by 132,000 in August, a deceleration from 268,000 in July.

Dollar Trading Steady-to-Better Ahead of Key US Economic Releases

The dollar climbed to a 24-year peak against the Japanese Yen on Thursday, as investors braced for higher U.S. interest rates while Japanese rates remain firmly pinned down.

The Sterling and Euro are also under pressure due to major issues including high inflation and an energy crisis.

Daily Forecast

Thursday will see the release of initial jobless claims and labor productivity and unit labor costs data, ahead of the Bureau of Labor Statistics’ nonfarm payrolls report on Friday.

Traders will also be eyeing the U.S. ISM Manufacturing PMI report, due to be released at 14:00 GMT. It is expected to show the U.S. avoided a contraction in August with a 52.1 reading.

Although most eyes seem to be focused on the $1700.00 level, the actual key technical area on the chart is $1694.50. This is the main bottom created on March 30, 2021. It’s also a potential trigger point for an acceleration to the downside with $1618.00 the next major target.