Commodity Market: Gold stuck in tight range as investors await key US Non-Farm Payrolls data

Spot Gold was mostly steady within a tight daily range on Friday as market focus sets on the US Non-Farm Payrolls report due out later in the day.

Some analysts project strong data will add to the case for the Federal Reserve to begin tapering monetary stimulus and mount pressure on the yellow metal.

“Gold’s fate will be determined by the non-farm payrolls print tonight,” Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA, was quoted as saying by Reuters.

According to Halley, some Asian investors were buying the precious metal in order to hedge risks of an unexpected outcome from the jobs data.

Last month, Federal Reserve Chair Jerome Powell had indicated that there was broad agreement among policy makers to start scaling back the central bank’s monthly bond purchases as soon as November, as long as September’s employment numbers were “decent.”

A reduction in monetary stimulus and interest rate hikes would bolster Treasury yields and increase the opportunity cost of holding non-yielding Gold.

As of 8:35 GMT on Friday Spot Gold was inching up 0.02% to trade at $1,755.51 per troy ounce, while moving within a daily range of $1,753.45-$1,760.63 per troy ounce.

The precious metal has dipped 0.09% so far in October, following a 3.13% loss in September.

Meanwhile, Gold futures for delivery in December were edging down 0.21% on the day to trade at $1,755.55 per troy ounce, while Silver futures for delivery in December were down 0.94% to trade at $22.445 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging up 0.12% to 94.314 on Friday. Earlier this week, the DXY climbed as high as 94.447, which has been a level not far from the one-year high of September 30th (94.503).

In terms of macroeconomic data, today market players will be paying attention to the September report on US Non-Farm Payrolls, Unemployment Rate and Average Hourly Earnings due out at 12:30 GMT. Employers in all sectors of US economy, except the farming industry, probably added 500,000 new jobs last month, according to a consensus of analyst estimates.

“If we see a number above 500,000, gold is likely to resume its downtrend as markets lock and load December for the start of Fed taper,” OANDA’s Halley noted.

Near-term investor interest rate expectations were without change. According to CME’s FedWatch Tool, as of October 8th, investors saw a 100.0% chance of the Federal Reserve keeping borrowing costs at the current 0%-0.25% level at its policy meeting on November 2nd-3rd, or unchanged compared to October 7th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,758.07
R1 – $1,764.10
R2 – $1,773.02
R3 – $1,779.06
R4 – $1,785.09

S1 – $1,749.15
S2 – $1,743.11
S3 – $1,734.19
S4 – $1,725.27