Commodity Market: Gold heads for largest weekly loss since November, US Non-Farm Payrolls report in focus

Spot Gold was mostly steady on Friday and was heading for its steepest weekly loss since late November ahead of the keenly anticipated US Non-Farm Payrolls data, with the precious metal being pressured by higher Treasury yields.

Benchmark US 10-year bond yields remained in proximity to highs not seen since March 2021, while increasing the opportunity cost of holding the yellow metal.

“Markets are increasingly pricing in an aggressive Fed … the whole prospect of Fed trying to control an inflation outbreak is obviously lifting yields,” IG Markets analyst Kyle Rodda was quoted as saying by Reuters.

As of 10:53 GMT on Friday Spot Gold was inching up 0.04% to trade at $1,791.61 per troy ounce. Yesterday the yellow metal slipped as low as $1,786.42 per troy ounce, which has been its weakest price level since December 22nd ($1,785.95 per troy ounce).

The commodity looked set to register its first drop out of four weeks, while being down 2.05%.

Meanwhile, Gold futures for delivery in February were edging up 0.12% on the day to trade at $1,791.35 per troy ounce, while Silver futures for delivery in March were down 0.09% to trade at $22.170 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging down 0.12% to 96.129 on Friday. Last week the DXY slipped as low as 95.570, which has been its weakest level since November 30th (95.517).

In terms of macroeconomic data, today market players will be paying attention to the December report on US Non-Farm Payrolls, Unemployment Rate and Average Hourly Earnings due out at 13:30 GMT. Employers in all sectors of US economy, except the farming industry, probably added 400,000 new jobs last month, according to a consensus of analyst estimates.

“A number above 550/600k will reinforce the Fed tightening faster narrative and weigh on gold. A number lower than 250k will ease those concerns and provide some support for gold,” Jeffrey Halley, a senior market analyst at OANDA, said.

Near-term investor interest rate expectations were little changed. According to CME’s FedWatch Tool, as of January 7th, investors saw an 8.1% chance of the Federal Reserve raising interest rates to the 0.25%-0.50% range at its policy meeting on January 25th-26th, compared to a 6.2% chance on January 6th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,796.28
R1 – $1,806.15
R2 – $1,821.44
R3 – $1,831.31
R4 – $1,841.17

S1 – $1,780.99
S2 – $1,771.12
S3 – $1,755.83
S4 – $1,740.53