Gold price is eying key higher territories ahead of NFP

Gold is trading at $1976.69 at the time of writing and bulls are likely correct, but they still have more ambitious objectives. The NFP numbers from this Friday are now everything. Gold’s price rose on Thursday, rising for the day from a low of $1,953.44 to a high of $1,983.15 in price. The US dollar dropped after the agreement on the US debt ceiling was approved by the House on Wednesday.

The news that an agreement to increase the US debt ceiling had been approved by the House gave the impression that authorities in the US had avoided a financial crisis. The Senate is currently considering the agreement to raise the debt ceiling for two years, and it is believed that it will be adopted well in advance of the June 5 deadline.

The US Dollar index dropped to 103.52 due to a number of factors, which was its lowest level in a while as recent data and remarks from some Fed members increased speculation that the central bank will stop in June. First off, a productivity dip was downgraded, and the ISM PMI revealed that the manufacturing sector shrank for a seventh straight month. Initial unemployment claims and the ADP report exceeded expectations, but the figures point to a less competitive labour market.

Speaking for the Federal Reserve, Governor Philip Jefferson and Philadelphia Fed President Patrick Harker said the bank would not raise interest rates at its upcoming meeting. All of this occurs before Friday’s pivotal US Nonfarm Payrolls report. A positive result would probably spark another US Dollar rise, which will drag down the price of gold.

According to estimates, the Federal Reserve’s policy committee may decide against raising interest rates when it meets later this month. The CME Fedwatch Tool indicates that there is a 75% chance the central bank will maintain current interest rates.

US payroll growth probably slowed slightly in May, but it was still a healthy 200k+ rate for the second straight month. We also expect wage growth to register at 0.3% MoM (4.4% YoY) and the unemployment rate to remain constant at a historical low of 3.4%, according to TD Securities analysts.

The probable scenario for the gold price as we approach Friday’s Nonfarm Payrolls report is shown in the above schematic. In the vicinity of a 50% extension of the range between the previous swing highs and lows where support held on Thursday, we are currently seeing a pump towards equal highs. The scenario shows a probable sell-off after the equal highs have been brushed around the NFP data.