Are Gold Prices to Break Out after NFP?

The calm in the gold market may disappear after the U.S. jobs report.

Bullion for immediate delivery slipped 0.1 percent to $1,175.68 an ounce as of 11:09 a.m. in London, and has been stuck in a trading range since late March. The metal has moved 1.3 percent on the day when monthly employment data is released, about twice the average daily swing, according to data compiled by Bloomberg from the past 12 months.

“The non-farm payrolls is probably the biggest market mover for gold,” Bernard Dahdah, an analyst at Natixis SA, said by phone from London. “I would not be surprised if it drops to $1,150 on a better-than-forecast reading.”

A big move in either direction would be a change for the market, which has been characterized by a lack of direction since March. The U.S. economy probably added 226,000 jobs in May, compared with 223,000 in April, according to a Bloomberg survey of economists before the data is released on Friday.

Gold dropped 1.3 percent this week, heading for a third weekly retreat. Prices moved about 0.3 percent after the last two U.S. jobs reports, data compiled by Bloomberg show. The six before that saw swings of more than 1 percent.
On the Comex, bullion for August delivery was little changed at $1,174.80 in New York. Trading volume was 35 percent below the 100-day average for the time of day.

Silver for immediate delivery rose 0.1 percent to $16.1623 an ounce. The metal has dropped 3.4 percent this week, the most since April.

Platinum slipped 0.1 percent to $1,098.86 an ounce. Palladium was little changed at $756.73 an ounce, heading for a fourth weekly drop, the longest run since October.


Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell