how is this NFP going to affect gold?

Answered at Feb 05, 2025

Impact of Nonfarm Payrolls (NFP) on Gold Prices

The Nonfarm Payrolls (NFP) report is a crucial economic indicator that can significantly affect gold prices. Here's how the upcoming NFP report might influence gold:

Historical Impact

Inverse Correlation: Historically, gold prices have shown an inverse correlation with NFP surprises. When the NFP reading falls short of market expectations, gold tends to rise, and when it exceeds expectations, gold tends to decline[1].
Immediate Reaction: Fifteen minutes after the release, gold has moved up by $7.13 on average if the NFP reading was disappointing, while it declined by $5.22 on positive surprises[1].

Current Market Conditions

Gold Price Levels: Gold is currently trading at record highs above $2,850, driven by geopolitical tensions and trade uncertainties[3][5].
Technical Analysis: Gold is positioned between key support and resistance levels. A strong NFP report could push gold lower, potentially threatening the $2,600 support, while a weak report could boost gold prices[2][4].

Upcoming NFP Report

Consensus Expectations: The December NFP is expected to show an increase of 160,000 jobs, down from November's 227,000[1].
Market Reaction: A weaker-than-expected NFP could lead to a dovish market reaction, supporting gold prices. Conversely, a strong report might limit gold's rally by reducing expectations of Federal Reserve rate cuts[2][4].

Key Factors Influencing Gold Prices

Trade Tensions: Escalating trade disputes between the U.S. and other countries have fueled gold's safe-haven appeal, contributing to its recent surge[5].
Federal Reserve Policies: The Fed's stance on interest rates, influenced by economic data like NFP, plays a significant role in gold's price dynamics[3][4].

References