Could NFP Data Impact Gold’s rally?

Gold breached the coveted $1,800 per ounce on Thursday on accelerated geopolitical tensions between China and the United States. But Friday’s employment report could disrupt gold’s momentum, according to analysts. December gold futures rose $33 on Thursday, touching a daily high of $1,812. At the time of writing, gold trades at $1790.5.

Taiwan is at the center of the latest round of geopolitical tensions between the US and China. On Thursday, markets were spooked by China firing several ballistic missiles around Taiwan in retaliation for US House Speaker Nancy Pelosi’s visit. China is also conducting aggressive military maneuvers.

The aggressive tone emanating out of Beijing in response to Pelosi’s visit to Taiwan has made for a classic safe haven play in recent sessions, with gold and Treasuries rising in tandem with the US dollar and the Japanese Yen.

This situation will continue to develop into the weekend. China continues its military harassment of Taiwan, while US President Biden pushes against a Senate bill that would recognize Taiwan as a ‘major non-NATO ally’ and boost its representation in international forums.

This has been an encouraging rally for gold after a stronger US dollar triggered a selloff to $1,700 an ounce in July. On a technical basis, a close above $1,789 would be a solid sign of more gains to come, according to strategists at TD Securities. “We estimate prices closing above $1,789/oz would catalyze enough of a shift in momentum,” they said Thursday.

However, the big obstacle is Friday’s July employment report out of the US “With nonfarm payrolls headlining the week tomorrow, our expectations of a stronger-than-anticipated report could quickly put a cap on the prevailing bullishness among gold bugs,” TD Securities’ strategists added.