Gold trading outlook: futures edge up ahead of US employment report

Gold rose on Friday before the release of US jobs data but was headed for its worst weekly performance in nearly two months.

Comex gold for delivery in April was up 0.32% at $1 266.7 per troy ounce at 08:46 GMT, shifting in a daily range of $1 269.00-$1 262.4. The precious metal lost 0.14% on Thursday and is headed for its biggest decline since mid-December.

Following substantial increases last month gold is headed for it largest weekly loss in seven as investors are waiting for the US employment report due later today. A robust data would outline an improvement in the US economy and thus ease speculations that the Federal Reserve will delay an interest rate hike. A potential increase in borrowing costs would dent demand for non-interest-bearing assets, including the yellow metal.

“A significantly lower job creation could support gold if it results in changes in the timing of Fed rate-hike expectations,” said HSBC analyst James Steel, cited by CNBC.

According to a poll by Reuters, the Labor Departments report will show that US non-farm payrolls have climbed by 234 000 in January, down from the 252 000 stated in the previous month, but still strong overall. Should that be the case, it would mark the twelfth consecutive month in which US employers created more than 200 000 workplaces.

The data may also show that the unemployment rate remained unchanged at a multi-year low of 5.6%.

However, even if the employment report provides strong figures, Fed officials may still postpone an increase in interest rates as plunging oil prices continue to keep inflation below the targeted level of 2%.

The US dollar index for settlement in March was up 0.08% at 93.810 at 08:46 GMT, holding in a daily range of 93.870-93.680. The US currency gauge fell 0.46% on Thursday to 93.732. A stronger greenback makes dollar-denominated commodities more expensive for holders of foreign currencies and curbs their appeal as an alternative investment, and vice versa.

In contrast to Feds intended actions, policy makers across the globe have been launching easing efforts, hoping that they can fight deflation and spur growth in the economies.

The European Central Bank introduced an aggressive stimulus program in January, following a similar move from the Bank of Japan late last year. Denmark reduced its deposit rate on Thursday, one day after the People’s Bank of China reduced the required minimum of reserves commercial banks must hold.

Meanwhile, gold has been supported by uncertainty surrounding Greece and its new government. Finance minister Yanis Varoufakis has met with officials from Germany, France and the UK in an effort to convince Europe to accept a proposed deal to swap Greeces old debt with new bonds that would be repaid as the country’s economy expands.

However, the ECB announced yesterday that it would stop financially supporting Greeces banks, sending their shares down the drain.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, climbed 5.38 tons on Thursday to 773.31 tons, the highest since late September. Changes in holdings typically move gold prices in the same direction.

Pivot Points

According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 264.5. If the contract breaks its first resistance level at $1 272.8, next barrier will be at $1 283.0. In case the second key resistance is broken, the precious metal may attempt to advance to $1 291.3.

If the contract manages to breach the S1 level at $1 254.3, it will next see support at $1 246.0. With this second key support broken, movement to the downside may extend to $1 235.8.