Gold price recovers despite robust US Nonfarm Payrolls report

• Gold price trades back and forth as investors await US official Employment data.
• Taking cues from the US ADP Employment report, job creation is foreseen to slow.
• Fed’s Daly sees no more rate hikes if the labor market slows and inflation remains close to 4%.

Gold price (XAU/USD) delivers V-shape recovery despite the United States Nonfarm Payrolls (NFP) report for September has reported that the number of job-seekers hired were significantly higher than expectations. Fresh payrolls were 336K while investors forecasted that US employers added 170K employees and 187K jobs were created in August. Weak Employment numbers from Automatic Data Processing (ADP) also elevated expectations of a decline in labor demand. The Unemployment Rate remained steady at 3.8% but a tick higher than expectations of 3.7%.

On a monthly basis, the Average Hourly Earnings grew at a steady pace of 0.2% while investors anticipated the growth in wage momentum by 0.3%. The annual wages softened marginally to 4.2% against estimates and the former release of 4.3%. Resilient labor market conditions have set a hawkish undertone for the Federal Reserve’s (Fed) upcoming monetary policy decision in November. 

Robust labor demand  Nonfarm is expected to intensify selling pressure in the US Treasuries and would weaken the appeal for Gold. Apart from that, expectations of one more interest rate increase from the Fed in the remainder of 2023 would deepen. This is expected to discomfort Fed policymakers and spur consumer inflation expectations.

Daily Digest Market Movers: Gold price attracts bids despite upbeat US labor market

• Gold price rebounds strongly despite the robust labor demand has elevated hopes of one more interest rate increase from the Federal Reserve (Fed)
• This week, the precious metal remained under pressure despite a soft US Services PMI report and soft ADP Employment report.
• On Wednesday, ADP reported that the US private sector added  89K jobs in September, half the number it reported in August. Job growth in the leisure and hospitality sectors remained robust, while layoffs were witnessed in the manufacturing and transportation sectors.
• "We are seeing a steepening decline in jobs this month"." Additionally, we are seeing a steady decline in wages in the past 12 months," Nela Richardson, chief economist at ADP, said.
• US Services PMI for September remained in line with estimates at 53.6, but the New Orders component came in significantly lower at 51.8 against the former release of 57.5. Being a proxy to the US service sector, which accounts for two-thirds of the US economy, a poor demand outlook could weaken the appeal for the US Dollar.
• The US Dollar Index (DXY) has corrected to near 106.30 from its 11-month high of 107.35. Still, the broader outlook will be shaped by the Nonfarm Payrolls data, which will be published at 12:30 GMT.
• Meanwhile, the weekly jobless claims for the week ending September 29 remained broadly unchanged. Individuals claiming jobless benefits for the first time increased marginally to 207K from the former reading of 205K but lower than expectations of 210K.
• The US Treasuries faced an intense sell-off this week due to the collaboration of expectations that interest rates will remain high amid a resilient US economy and concerns over rising fiscal deficits. 10-year US Treasury yields trades around 4.73%.
• Chicago Federal Reserve Bank President Austan Goolsbee sees no more upside in Treasury yields and expects the US economy to remain on the ‘golden path’ towards a 2% inflation goal.
• About the interest rate outlook, San Francisco Fed Bank President Mary Daly said that another rate hike may not be needed if the labor market slows, inflation remains around 4% and financial conditions remain tight.
• Earlier, economists at ING said that a strong NFP read could easily put markets back on a bearish track and reignite aggressive Dollar buying.

Technical Analysis: Gold price finds support near $1,810

Gold price discovers buying interest after dropping to near $1,810 as investors ignore the release of the better-than-anticipated NFP report. A death cross, represented by the 50-day and 200-day Exponential Moving Averages (EMAs) at $1,905.00, warrants more downside. Momentum oscillators have turned extremely oversold.