The Friday NFP report comes at an extremely critical time. Following the Fed July 29 decision, we had a market pricing in 63-67% on September hike after a very specific 9-3 split vote that led to a lot of confusion among many traders. This could now prove those expectations correct or throw them overboard with a repricing event.
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The Setup
We are in a seven week consolidation in Gold and watching for a breakout after a swift decline, some are calling gold a ‘coiled spring waiting to pop’ post NFP figures. Our Daily shows an extremely tight range where nothing clear will emerge until this report is published:
Key Gold Levels
Level Value Significance
Breakout Confirmation 4066 Bearish trigger
Buy Zone 4119 Key support
1stTargets 4148-4154 Quick upside push
FinalTarget 4168-4172 Extended move
BreakdownLevel 4038 Bullish trigger
The 0.618 Fib golden level comes into play around 4120, with stronger buying should Gold remain north of 4200.
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The Scenarios
Goldilocks 75k-95k with a 4.2% UE
The perfect outcome for the ‘risk on’ assets and markets will likely remain muted overall:
Gold: Treading water around 4166-3986
USD: Still weak
Tone: Wait
Miss (60k with UE higher at 4.3%+)
Could force the dollar’s hand and undermine the Fed’s hawkish tone:
Gold: Breaks higher towards 4166-4188
USD: Should accelerator thesell offtowards98.60-98.00
Risk: Initial relief bouncein riskassets fades rapidlyto recession fearsofthenatural resultof weak data
Beat (110k+ with UE stable to down)
Would reinforce the hawkish rhetoric by the Federal Reserve. This could lead to a sharp risk repricing with Dollar strength :
Gold: Back under towards 3986-3944
USD: Likely pushing up to 101.80-102.00 area
Fed Odds: August NFP spike into July rates above 70% probability
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