Strong U.S. non-farm payroll numbers for January have caused a significant shift in the gold market, with the precious metal experiencing a sharp decline in price. The unexpected surge in non-farm payrolls raised concerns about potential interest rate cuts by the Federal Reserve, leading to a rise in the dollar and U.S. Treasury yields.
The U.S. Department of Labor’s employment report for January indicated that the unemployment rate remained below 4% for the longest period in over 50 years, and non-farm payrolls added 353,000 jobs, the largest increase in a year. Additionally, wage gains exceeded expectations, with average hourly earnings rising 0.6% month-on-month and 4.5% year-on-year.
Following the release of these strong economic indicators, the price of gold fell by 0.8%, but still remained above the key $2,000 level, demonstrating its resilience in the face of positive news. Despite the decline, technical analysis suggests that the overall momentum for gold remains positive, with the potential for a rebound and further upward movement.
An independent analyst in New York described gold’s trend as “still as strong as a barnacle despite the excellent jobs report,” pointing to the market’s continued expectation of a potential interest rate cut by the Federal Reserve within the year.
The report’s impact has also led to a shift in market expectations for potential rate cuts by the Federal Reserve, with a decreased likelihood of a cut at its upcoming meetings in April and May. With the possibility of a rate cut now uncertain, the market continues to closely monitor the movement of gold prices.
Looking ahead, the price of gold is expected to remain above the 2030-2035 support area, with potential for a rebound and further climb. However, if the price falls below this level, gold prices may retest key support levels between $2,020 and $2,000.
Wang Gang from the Bank of China’s Guangdong Branch shared his personal views on the matter, emphasizing that they do not represent the views of his institution. These developments in the gold market serve as a reminder of the complex interplay between economic data, market expectations, and the resilience of the precious metal.