Gold To Break Key Resistance On NFP Day? – Gold Analysis & Prediction

Key Points

• It has been a tense week in the markets, with many waiting for today’s headliner event: US Non-Farm Payrolls.
• This week’s labor data has been weak, with JOLTS Job Openings seeing a downward revision from last month.
• Traders should always prepare for all outcomes on NFP Day, with volatility certain.
• No market feels the NFP volatility more than gold. Can the price finally break resistance at all-time highs?

Weekly Recap

This week was the first of September’s trade, and it has provided us with some interesting moves. Risk assets have very much been on the defensive, with the NASDAQ leading the way in losses. The dollar has staged a slow recovery, albeit not convincing. As a result, gold gains have been limited and are in a holding pattern.

Although JOLTS Job Openings and ADP Non-Farm Employment Change data should not be used to predict what happens with the Non-Farm Payrolls report, it is hard to ignore the fact that the labor market seems to be slowing. The JOLTS figure came in at 7.67m, below the forecast of 8.09m, with a downward revision of last month’s figure. The ADP Non-Farm Employment Change data came in at 99,000, also below the forecast of 144,000, and again with a downward revision of last month’s figure. This will excite gold traders and investors, but they are clearly waiting for the big one…

Softer NFP Ahead?

On the first Friday of every month, the U.S. Department of Labor’s Bureau of Labor Statistics releases an employment statistics report from the previous month, and it loves to cause shockwaves throughout the markets, especially gold. So, if you are actively looking to trade gold and you embrace volatility, then US Non-Farm Payrolls Day is the one for you!

There has been underlying strength in the US labor market throughout most of the Federal Reserve hiking cycle, which was evident in the NFP figures. From December to April, the figure was quite considerably above the forecast. However, August’s Non-Farm Employment change figure of just 114,000, coupled with a yearly downward revision of 800,000 jobs, has investors questioning the labor market’s actual strength and the report’s validity. 

The forecast for today’s figures is an unemployment rate of 4.2% vs 4.3% previous, a Non-Farm Employment change figure of 164,000 vs 114,000 previous, and average hourly earnings of 0.3% vs 0.2% previous. In other words, all of the figures are expected to improve, and if this proves to be accurate, then this will likely spike the US dollar and limit gold gains in the short term. However, it feels as if there is little margin for error, and a softer set of readings could send gold into a buying frenzy. 

Will Gold Break Resistance Today?

Gold has had a fantastic year so far, benefitting from the volatility and uncertainty in the global economy. The price currently trades at $2515, 22% higher than the yearly open. There is little evidence to suggest that the bullish trend is shifting either.

The H4 chart shows that $2520 to $2530 has acted as resistance over the past few weeks. As a result, a bearish order block has been identified at this price area. Should NFP come in stronger today, this could drag gold prices down toward the sell-side liquidity at $2471.

However, underneath this sell-side liquidity sits a bullish order block within the golden pocket of the Fibonacci retracement. As a result, $2457 is a key support area.

If NFP comes in weaker than expected, traders are unlikely to see $2457. Therefore, they should be prepared to trade a clean breakout above the bearish order block and all-time highs. From here, gold prices could print at least $2560, which would be another higher high on the higher time frames.