Gold rallied on Thursday as the dollar pulled back after data showing US jobless claims rose more than expected last week, giving investors some hope that the Federal Reserve’s rate hikes may be less aggressive than feared. On the other hand, amid the drama in the crypto market, the price of Bitcoin fell sharply below $ 20 thousand. However, the US non-farm payrolls data to be released today will be more decisive on the Bitcoin and gold markets.
Gold and Bitcoin investors keep an eye on US employment data
The number of Americans filing new applications for unemployment benefits posted the highest increase in five months last week. But the underlying trend remained consistent with a tight labor market. Now, Bitcoin and gold investors’ eyes are on the US non-farm payrolls (NFP) data, which will be released at 16.30 CEST. Consensus forecasts are for NFP to increase by 205k and unemployment rate to be 3.4%.
US Non-Farm Employment Data for the last 10 months / Source: InvestingIf the NFP rises above expectations and the unemployment rate falls below expectations, it has the potential to negatively affect the Bitcoin and gold market, as the Federal Reserve will continue to maintain its hawkish stance for a longer period of time. Because an increase in NFP indicates that the economy continues to grow, it is considered a sign that inflation will rise. This is seen as a key factor in deciding the Fed’s next rate hike. Market analyst Eren Şengezer evaluates the impact of data on the markets as follows:
The CME Group FedWatch Tool shows markets are pricing in a 50bps rate hike in March with a 78% probability. There will be more room for DXY to strengthen if NFP beats market expectation. Therefore, risk-sensitive assets are likely to have difficulty finding demand. However, NFP data that does not meet expectations can have the opposite effect. In that case, a risk rally is possible until next week’s US CPI data.
How will the US NFP data affect the gold market?
Bob Haberkorn, senior market strategist at RJO Futures, says gold has had a tough week because of what Jerome Powell said about the rate hike. However, he notes that with the significant increase in unemployment claims, gold is on the rise. In this context, Haberkorn makes the following assessment:
The fact that we’re probably starting to see a crack in the employment numbers is causing gold traders to think the Fed won’t be able to raise a half basis point at its next meeting. Friday’s non-farm payroll (NFP) figures could push gold to $1,850.
cryptocoin.com As you follow on Wednesday, Fed Chairman Jerome Powell reaffirmed his message of higher and potentially faster rate hikes. However, he stressed that the debate continues, with a decision based on data to be released before the US central bank’s policy meeting two weeks later. Erik Bregar, Director of Foreign Exchange and Precious Metals Risk Management, Silver Gold Bull Inc comments:
If you’re a bull, you’re giving support for softer-than-expected US data at the FOMC meeting. The upside is likely to force downside retests of $1,788 for gold and $19.00 for silver.
“Fed looks at trends in data rather than individual numbers”
Economists polled by The Wall Street Journal expect the data to show 225,000 jobs created last month, compared to the 517,000 boom the previous month. “If non-farm jobs data lives up to expectations, there will be higher volatility in many markets: This Bitcoin Exchanges Could Be Sued,” said Jim Wyckoff, senior analyst at Kitco.
US government data on Thursday showed the number of Americans applying for unemployment benefits jumped to a 10-week high of 211,000 in early March. City Index and FOREX.com market analyst Fawad Razaqzada said in market commentary that this is “contrary to the recent trend of a strong US labor market,” with people applying for unemployment-related benefits more than expected. However, the analyst underlines that these weekly data are highly volatile and the Fed looks at the trend of the data rather than individual figures.
This is needed for a stronger recovery of gold!
According to Razaqzada, the US job market is strong and this is a concern for the Fed, which wants to dominate inflationary pressures. The analyst notes that everything now depends on Friday’s US jobs report, followed by next week’s CPI. Accordingly, the analyst makes the following statement:
If both of these macro indicators turn out to be warmer, or at least meet expectations, then that could further raise bets on a 50bps rate hike at the Fed’s March 22 meeting. We’ll have to see a surprise loss in the jobs report for gold to bounce back stronger. If that happens, it could support stocks, gold and bonds as traders question the possibility of such an aggressive rise.
Technical analysis: Gold signals more bearish
Technical analyst Anil Panchal draws the technical picture of gold as follows. Gold price is slipping inside a one-week symmetrical triangle and recently loosening from the resistance line amid an upcoming bearish cross on the MACD. It is worth noting that the RSI’s pullback from the overbought zone is also putting downward pressure on the gold price, which is targeting the 100-bar Exponential Moving Average (EMA) around $1,827 at the latest.
However, a broad support area between $1,820 and $1,823 that includes multiple levels marked since late February looks like a hard nut to crack later on for gold sellers. If gold price remains weak after crossing $1,820, the February upside support line forming part of the aforementioned triangle could be the last defense for gold buyers near $1,810.
Gold price: Hourly chartMeanwhile, an upside gap in the upper line of the indicated triangle, close to $1,835 at the latest, could push the gold price towards its early month high near $1,845. Following that, around $1,859, the month high, will be in the limelight. Overall, the gold price is signaling more bearish, but to the south, space seems limited.
