Gold price is trading higher ahead of the highly-anticipated NFP report from the US for January. XAUUSD steadily traded higher yesterday from an intraday low of $1,552.34 to $1,568.11. By the end of the New York session, it settled $14.08 higher at $1,566.42.
XAUUSD was under selling pressure for the most part of this week. Part of it was due to market sentiment improving on news of a vaccine for the coronavirus. It also did not help gold price that data from the US beat expectations. For instance, the ADP non-farm employment change report printed at 291,000 versus the 157,000 forecast on Wednesday. Consequently, this data have made market participants optimistic about the upcoming NFP report due later today. It is not uncommon, however, for the dollar to weaken ahead of the NFP’s actual release because investors typically reduce their risk with its outcome.
At 1:30 pm GMT, the official government data is expected to show that 163,000 jobs were added for the month of January. Meanwhile, the unemployment rate and average hourly earnings are seen at 3.5% and 0.3%, respectively. The NFP report typically sparks significant volatility in the markets because it is the Fed’s preferred metric for gauging the health of the labor market. In the past, we have seen the central bank base its monetary policy decisions on NFP reports. Therefore, we can expect that better-than-anticipated figures could drag XAUUSD lower. Meanwhile, lower-than-anticipated readings could spark dollar weakness and push gold price higher.
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Gold Price Outlook
On the 4-hour chart, we can see that gold price has recouped most of its losses back to the area between the 38.2% and 50% Fib levels (drawing the Fibonacci retracement tool from the high of February 3 to the low of February 5). This price, around $1,565.70, also coincides with the 100 SMA. It also aligns with previous lows on XAUUSD. There are already reversal signals which could mean that gold price would soon resume its slide.
However, be wary of a strong bullish close above $1,569.00 because this could mean that XAUUSD could still push higher. There is near-term resistance just above $1,588.00 where gold price peaked on the last week of January.
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