Long Samnang, PPLS business manager
Important US employment data scheduled for release this week is forecast to be lower than previous months, suggesting gold could briefly rise from its current bearish trend.
Average Hourly Earnings, the Unemployment Rate and the Non-Farm Employment Change – all of which are main US economic indicators and reflect the gold-dollar inverse relationship – are to be announced on Friday at 8:30pm Cambodian time, with the latter predicted to be down on January.
While Average Hourly Earnings and the Unemployment Rate, according to forexfactory.com, are forecast to remain unchanged at 0.3 per cent and 3.4 per cent, respectively, the expectation is that the Non-Farm Employment Change in February will be far off January’s 517,000.
With these signals, the price of gold, which was around $1,849 per ounce on Tuesday, could shift from the bearish trend it has demonstrated since February 2, with a high price of $1,959 per ounce.
Based on the weekly chart, the gold price was moving sideways in the range of $1,665 to $1,998 per ounce.
PP Link Securities (PPLS) business manager Long Samnang says despite the prediction of low US job growth, at just 224,000, the real number would likely exceed that as the forecast is much lower than the previous month’s actual data.
“With Average Hourly Earnings and the Unemployment Rate at least expected to remain the same, the news may not be as bad as expected, so it might be the time to sell gold before the data is released.
“And if the indicators show positive results for the US economy, it would be time for investors and traders to buy it back,” Samnang says.
Meanwhile, Bloomberg provided a few key takeaways for a longer-term view.
“Friday’s jobs report will be the last before the Federal Reserve convenes on March 21-22 to consider another 25 basis-point increase in rates or to potentially be more heavy-handed in light of recent data showing stubborn inflation,” it reported.
Bloomberg Economics analysis said indications were the US labour market was set for a decline.
“Our analysis suggests many of the high-profile layoffs that have been announced – in tech, for example – only translate to job losses about two months later. If that’s correct, we should expect to see initial jobless claims climb in March.
“The March jobs reports – which won’t come out until after the next FOMC [Federal Open Market Committee] meeting – will likely show clearer signs that the labour market is weakening,” said economists Anna Wong, Stuart Paul and Eliza Winger.
