Markets awaits US NFP data

Gold is on track to deliver its worst weekly performance in a month and a half

By Raed Alkhedr | @raedalkhedr | 4 August 2023

  • Gold is stabilizing ahead of today's release of US job data.

  • Rising US bond yields are exerting pressure on gold.

  • The US economy is expected to add 205,000 jobs, with unemployment expected to remain steady at 3.6%.

Gold is steadying in anticipation of the upcoming release of US job data.

Gold steadied during Friday's trading after experiencing a week of significant declines. It is anticipated to register its most substantial weekly loss in about a month and a half. This is occurring at a time when markets are eagerly anticipating the announcement of US job data in the coming hours, which could impact gold's future movements. The release of positive economic data earlier this week pushed Treasury bond yields to their highest levels in nine months. As a result, gold has experienced a decline of over 1% this week, while US 10-year bond yields reached their highest point since November on Thursday. The movement of the yellow metal remains contingent on the NFP report scheduled for release today, as any indications of sustained recovery in the job market could result in a noticeable increase in the US dollar, thereby putting pressure on gold in the future.

The release of Canadian employment data

In addition to the US job data scheduled for release today, markets are also eagerly awaiting Canadian employment data. Most forecasts suggest an increase in the employment change rate by 24,600, while the unemployment rate may rise from 5.4% to 5.5%. Surpassing last month's job report might prove challenging, given that the economy created 59,900 jobs in June. Full-time employment saw a notable rise of 109,600, supporting the job growth at that pace. During its last meeting, the Bank of Canada surprised markets by raising interest rates by an additional 25 basis points, as inflation remains the bank's primary concern. Bank members attributed this decision to the bank's preparedness to take all necessary measures to curb the ongoing surge in prices. The bank reaffirmed the recovery of the labor market sector and recognized it as one of the most crucial sectors supporting the monetary tightening cycle. Therefore, if the job sector adds more jobs than expected today, it may provide robust support for the Canadian dollar to appreciate once again against most major currencies.