The NFP Report Brought Gold Towards 2,000 and Pushed USD Higher
The gold (XAU) price declined by more than 1.2% on Friday after higher-than-expected US jobs figures lowered the possibility of an interest rate cut in March, boosting the US Dollar and Treasury yields.
The U.S. Nonfarm Payroll (NFP) report was surprisingly strong, highlighting labor market resilience. Job growth accelerated to 199,000 jobs created in November, while unemployment fell to 3.7% and average earnings grew faster than expected. 'This was a relatively healthy report and will help to push back some of the excitement around imminent and aggressive rate cuts,' said Richard de Chazal, the macro analyst at William Blair in London. Indeed, the market currently prices in only a 43% chance that the Federal Reserve (Fed) will lower the base rate in March 2024. Before the report, this probability was close to 60%.
XAU/USD was falling slightly during the Asian and early European trading sessions. Today, the macroeconomic calendar is rather light. There are no big events that may trigger increased volatility. Thus, XAU/USD will probably continue to remain under bearish pressure as long as the price remains below the important 2,008 level. 'Spot gold may test support of $1,992 per ounce, a break below which could open the way towards $1,962–$1,977 range,' said Reuters analyst Wang Tao. At the same time, lower XAU/USD prices might stimulate demand on the physical market. Reuters reported that physical gold dealers in India increased discounts to seven-month highs last week to attract customers. 'Demand has dried up due to the price rise. Instead of buying, some investors are selling gold coins and bars,' said Ashok Jain, the proprietor of Mumbai-based gold wholesaler Chenaji Narsingji.
AUD/USD Consolidates Above 0.65500 Ahead of the RBA Governor's Speech
The Australian dollar (AUD) lost 0.36% on Friday as the US Dollar rose on strong Nonfarm Payroll (NFP) numbers.
The U.S. NFP report released on Friday clearly showed that investors were too optimistic to expect a rate cut in March 2024. The U.S. labor market remains quite resilient, with a low unemployment rate and strong earnings growth. 'The market was clearly leaning in the other direction,' said Steven Englander, the head of global G10 FX research at Standard Chartered Bank. In Australia, investors await November's employment data on 14 December to gain clarity on the Reserve Bank of Australia's (RBA) plans on the trajectory of interest rates.
AUD/USD was declining in the Asian and early European trading sessions. Today, AUD/USD may experience above-average volatility as two events may influence the pair's exchange rate. Michele Bullock, the RBA Governor, will give a speech at 10:20 p.m. UTC and may clarify the future monetary policy. Then, Westpac-Melbourne Institute will publish its Consumer Sentiment Index for December at 11:30 p.m. UTC. If the figures are higher than expected, the short-term bearish trend in AUD/USD may reverse. However, the technical bias remains bearish as the Australian dollar trades below 0.65850, the important intraday level.