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Price of Gold Ahead of the Nonfarm Payroll Report

The price of gold pares the advance following the Federal Reserve interest rate decision amid the recent rise in longer-dated US Treasury yields, and the precious metal may remain under pressure ahead of the US Non-Farm Payrolls (NFP) report as the update is expected to show employment increasing for the fourth consecutive month.

Fundamental Forecast for Gold: Bearish

Gold falls from 2-mth high as dollar strength dents safe-haven appeal

P = $1,799.10 -21.1
A = $1,778 -4.45%

*investors speculated that a swifter than expected U.S. economic recovery might prompt an interest rate hike.
** Fed’s Powell says U.S. economy is “not out of the woods yet”

The price of gold appears to have reversed course ahead of the $1800 handle even though the Federal Open Market Committee (FOMC) retains the current path for monetary policy, and a further improvement in the US labor market may drag on bullion as it instills an improved outlook for growth and inflation.

Nonfarm Payroll Preview

The NFP report is anticipated to show the US economy adding 950K jobs in April, while the Unemployment Rate is seen narrowing to 5.7% from 6.0% in March, and the fresh data prints may prop up longer-dated Treasury yields as it puts pressure on the FOMC to scale back its emergency measures.

It remains to be seen if the FOMC will adjust the forward guidance at its next interest rate decision on June 16 as Fed officials are slated to update the Summary of Economic Projections (SEP), but more of the same from Chairman Jerome Powell and Co. may undermine the recovery in US yields as the committee stays on track to “increase our holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month.”

(source: Dailyfx)


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