Non-Farm Payrolls Ahead: How to Position for Gold?

During Thursday's Asian trading session, gold fluctuated between slight gains and minor pullbacks, consolidating around $4060. With the US September non-farm payrolls report finally due, the market remained cautious, with investors generally choosing to postpone adding new directional positions. The current sideways pattern also reflects the market's increasing sensitivity to macroeconomic uncertainties. The core factor influencing gold prices remains changes in interest rate expectations. Investors are remaining on the sidelines ahead of the crucial US non-farm payrolls report. Expectations of a December rate cut by the Federal Reserve continue to cool, and the dollar has risen to its highest level since May, putting pressure on non-yielding gold. A recovery in risk appetite in the stock market has further weakened safe-haven demand, but uncertainty surrounding the momentum of the US economy due to the prolonged government shutdown limits the downside potential for gold prices. The market is awaiting the non-farm payrolls data to determine the dollar's trend and the further direction of gold.

Recently, the likelihood of a December rate cut by the Federal Reserve has further decreased. Given the cautious policy stance, the dollar has strengthened and risen to its highest level since May, thus significantly suppressing gold, which does not generate interest. The latest FOMC meeting minutes showed that while some officials favored further interest rate cuts, several others believed that further easing could exacerbate future price pressures. The market subsequently readjusted its pricing of the policy path, putting short-term pressure on gold. Meanwhile, global stock markets generally showed a positive sentiment, and the recovery in risk appetite weakened the safe-haven demand for gold. However, the data gap in the US economy due to the prolonged government shutdown has led to market skepticism about the true economic momentum. Investment institutions pointed out: "Because the data recovery after the shutdown is incomplete, the actual growth momentum may be lower than apparent, therefore, support for gold still exists." Under the interplay of multiple factors, gold prices, although under pressure, did not experience a one-sided decline. Regarding the geopolitical environment, recent developments in external negotiations have further improved risk sentiment and suppressed the upward momentum of safe-haven assets. This news strengthened the market's willingness to allocate to risk assets, prompting some funds to flow from gold to other assets.

Market Trend Analysis: Today, the highly anticipated non-farm payrolls report is about to be released! This is not just any ordinary employment data; it is the first employment data released after the US government reopened, drawing immense attention! Why is this non-farm payroll data attracting so much attention? Think about it: during the government shutdown, many economic data points couldn't be released normally. Now that the government has finally reopened, this data is like a ray of light in the darkness, illuminating the latest situation in the US job market. Moreover, it has a crucial impact on the Federal Reserve's future monetary policy direction, meaning it could potentially trigger significant market volatility! Looking at Tuesday's ADP data, the focus is undoubtedly on weak employment and increased expectations of interest rate cuts! However, there are already various speculations and analyses in the market, and no one can guarantee what the data will actually show. If the data far exceeds expectations, it could give the dollar a strong boost. How will the stock market, gold, and commodity markets react? If the data falls short of expectations, will expectations of a Fed rate cut intensify further? All these questions will be answered today.


Gold prices have fluctuated wildly these past two days, but this is in line with our expectations. If you recall yesterday's analysis, we predicted a rise followed by a fall, and the market cooperated. All three of our long positions yesterday were profitable. Today, gold prices plunged in the Asian session. My strategy for today's Asian session is to sell on rallies. This isn't a direct, one-sided drop, but rather a decline within a range. Every rebound is an opportunity to sell. Yesterday's daily chart showed a doji candlestick with a very long upper shadow, and the 5-day and 10-day moving averages have converged, indicating resistance around 4090. My strategy for today's Asian session is to continue shorting around 4090, with a target of 4000. Gold has formed a double-step decline pattern. Unless gold rises to 4111, the outlook remains bearish. Gold has been very volatile recently, so timing is crucial. Avoid long positions before the US session; look for opportunities to short. The real action will come with the US non-farm payroll data. If gold breaks 4000, you can add to your short positions. In summary, today's short-term trading strategy for gold is to primarily sell on rallies and secondarily buy on dips. The key resistance level to watch in the short term is 4100-4110, while the key support level is 4030-4000. Please keep up with the pace.