Gold futures price movement is seen little puzzled at the Globex ahead of the mostly eyed US Nonfarm payroll release later today. Asian equities followed sell-offs from the US overnight as the slew of easing concepts painted the bleak economic picture. Euro is still continuing its down trend. US probably has added more jobs in June and a likelihood of surprise upside has mounted after Thursday’s ADP data reported more than expected additional jobs. The reason for the data looking good could be because of seasonality. Till now the numbers are far less than the average of 252,000 jobs per month which is the required run rate for reducing the unemployment rate below target of 8%.
Report projecting 125-.25 range would hint further slowdown in the labor sector. Nevertheless, an increment from the prior 69K would certainly be good enough for the market to react at a positive tune which would lead gold to fall. But still it would not be enough to reduce the unemployment rate below 8.2%.
There are two sides to the eco report today, those who would like to see a report over forecast, which would support economic growth and recovery in the US and support the USD and those who would like to see a negative report which would push the US Fed into action. The camp supporting additional monetary policy as those who do not care about eco data or supply and demand, but simply take the money out of the economies, they are the leeches and their numbers are growing by leaps and bounds.
If they are in control we can see gold turn upwards. On the other hand watch the USD to pick up momentum.
Silver futures prices are also hovering near its prior closing. The market is likely to be dizzy ahead of the highly watched nonfarm payroll data later today. Especially after yesterday’s ADP numbers showed more than expected jobs addition and a huge fall in unemployment benefits, nonfarm payroll is also expected to rise. As we discussed in gold’s outlook, a likely 90k additional jobs although looks better than the last time’s lowest 69k, it is far below 252k which is needed to be the minimum rate to reduce the unemployment level below target level. Hence, although this number seems slight improvement to the labor sector, the immediate impact on silver would be negative.