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Price of Gold Fundamental Daily Forecast – Early Liquidation Ahead of Friday’s Non-Farm Payrolls Report?

Gold futures are trading lower on Monday as increased appetite for riskier assets dampened the precious metal’s appeal as a safe-haven asset.  The market has now retraced more than 50% of last week’s two-day surge after dovish comments from Fed Chair Jerome Powell on Wednesday.

At 12:21 GMT, December Gold futures are trading $1810.70, down $6.50 or -0.36%.

The signal from the stock market is pretty clear, but the movement in U.S. Treasury yields and the U.S. Dollar is causing some confusion. Meanwhile, the relatively low volume suggests many of the major players may have already moved to the sidelines ahead of Friday’s U.S. Non-Farm Payrolls report, which could determine the direction of the market over the near-term.

Last week, Powell emphasized the importance of the jobs market getting back on track before the Fed would even consider tapering its bond stimulus purchases. This would be a form of tightening that would exert a bearish influence on gold prices.

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However, Powell also said that the economy was a long way from strengthening enough to warrant such a move. This comment was supportive for gold prices.

Today’s price action suggests that traders have mixed thoughts about what to expect from the Non-Farm Payrolls report and the timing of the Fed’s next move.

Since the Fed isn’t scheduled to meet until September 21-22, it’s our belief that gold traders will turn toward economic reports and Fed speakers for guidance. This could create volatility while at the same time creating a rangebound trade.

It seems that in less than a week, gold has gone from a potential breakout and breakdown candidate on the charts to a buy the dips, sell the rallies market. Continue to look for choppiness over the near term.

Today’s selling pressure may be a continuation of last Friday’s weakness. That was caused by traders interpreting a slowdown in the rate of PCE inflation. Although the report indicated that inflation rose, apparently it didn’t rise fast enough for the gold bulls.

But the key takeaway from the PCE report is that the rate of inflation growth may be slowing just like the Fed said it would. If that’s true then this will take us back to our original conclusion that the single biggest report that could fuel the next major move in gold is Friday’s jobs report.

I don’t think the Fed is too worried about inflation, but it is worried about the strength of the jobs market and so should gold traders.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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