Gold analysis ahead of NFP: Its all about sentiment

Fundamental View:

It is almost clear that the fundamental reports are not dominating the gold market for a few weeks. Last two weeks are several U.S. market mover data have already been released. Most of the fundamental reports were printed positive, but they didn't help the USD against gold.

The only reason behind these odd market movements is playing market sentiment. Most of the countries are facing inflationary pressure. So investors are scared of 2008 style economic crisis because of covid-19. As a result, sentiment is supporting safe-haven asset gold despite the U.S. positive financial reports.

Today the bureau of labor statistics will release the U.S. job market report. NFP is a major economic report for a knee-jerk movement for the gold price, and there is no doubt. But the question is will this report help the USD, or will it be another message to investors?

What will happen if the NFP print is positive than forecast?

If the NFP report print is positive (above 500k) than forecast, there will be a positive impact on the USD against gold. I mean, the gold price will drop, at least for the next FOMC release. Because in the FOMC fed, members announced that the tapering is data-dependent.

Of course, NFP is the major economic data. So, a positive NFP number will help the USD till another FOMC release. But keep it kind, as the market sentiment is helping the safe-haven asset gold. So, don't expect much that the gold will drop heavily. On the other hand, a positive labor market report may help test the gold price in the nearly 1720/1725 price zone.

What will happen if the NFP print is negative than forecast?

There will be a disaster in the market. Whether positive U.S reports cannot weaken the gold, negative reports must throw the dollar in the air because market sentiment is helping to raise the gold price as a safe-haven asset.

SO, if the NFP report prints negative than the forecast, we may buy gold again till the 1830/1835 price zone. Today NFP forecasted 490k jobs would be added in the labor market where the last report was 235k.

I think NFP will be positive. Because some latest major economic reports like ADP, ISM reports, Unemployment claims, Core PCE, and Final GDP printed positively than forecast. So, there is a big chance that the NFP may print positive today.


Technical view:

From the present rate, 1765 to 177o is identifying the resistance level. So, breaking above 1770 will open the door for the 1780/1785 price zone. So 1785 may play as a strong resistance level. But if the NFP print is too negative, gold will immediately break the 1785 price and may test the next resistance 1800/1805 price zone. And to the final upside target is the 1830/1835 price zone.

On the other hand, a positive NFP report may help the USD. from the present rate 1745 is identifying near-term support. After breaking and stable below 1745, our next target is the 1735/1730 price zone. After breaking below 1730, our final downside target is the 1720/1723 price zone.