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Gold Prices Could Hold $1,200 On Stronger Employment

Wednesday March 30, 2016 13:39
(***** News) - Even faced with a positive U.S. nonfarm payrolls report, gold’s momentum is expected to keep prices above $1,200 an ounce, according, to some analysts.
Heading into Friday’s report, the analysts noted that March’s employment data would have to fire on all cylinders -- robust job growth, a drop in the unemployment rate and an increase in wages -- to impact gold prices in the near-term, they said.
Bill Baruch, senior commodity broker at iiTrader said jobs gains would have to reach 250,000 to have a significant impact on gold and push prices to the key psychological support level.

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“We would have to see a pretty big blowout number to hurt gold prices,” he said. “But I don’t see that coming into play.”
According to consensus estimates, economists are expecting to see job gains of 205,000 jobs for March. A slightly stronger than expected ADP private employment report has created some upside risk.
Wednesday, payrolls processor ADP said that private companies created 200,000 jobs in March, up from expectations of around 195,000.
But the jobs report is more than just the headline number. While a strong employment figures could create a knee-jerk reaction on markets, Baruch also noted that employment gains with no wage growth could be positive for gold, similar to what happened at the start of the month. Although February employment showed job gains of 242,000, there was no wage growth and gold prices hit a session high of $1,281.10.
“You really have to look at the report as a whole and not just react to the headline number,” he said.
Fawad Razaqzada, technical analyst at City Index, said that he could see gold falling to $1,200 an ounce on a strong employment report, also highlighting 250,000 level. But He added that he would expect support to hold as there is still strong momentum in the marketplace.
Commodity analysts at HSBC said in a report Tuesday that print above 200,000 on Friday’s report could trim some of gold’s recent gains, but its rally, since the start of the year, would still remain intact.
“It would take a very good jobs number – and a change in market sentiment regarding a likely April rate hike – to send gold back down to the $1,200/oz level, we believe,” they said.
Some analysts see the bar set even higher. Matthew Ashely, an analyst at Blackwell Global Investments, said that he thinks it would take a print of around 300,000 to drive gold to $1,200.
“I think the market is still very uncertain and this sentiment will generally outweigh any particular indicators’ effect,” he said.
Ashely added that a print below 200,000 could push gold prices to recent highs at $1,280 an ounce.
However, some analysts think that gold could be a little more sensitive to Friday’s employment data than some people are expecting.
Phillip Streible, senior market strategist at RJOFutures, said despite dovish comments from Fed Chair Janet Yellen Tuesday, there is no clear consensus among central bank members on the future trajectory of interest rates.
“You are seeing a lot of opposing views from Fed members and a few good economic reports might sway others to support an April move,” he said.