HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

NFP's Effect on Gold Prices


While the relationship between gold and NFP is not clearly defined, in the short term, it could serve as an indicator and a trading opportunity. Being one of the most advanced global economic powers, the US has considerable amounts of gold whose price can be noticeably affected by changes in the labour market as documented in NFP reports. While the relationship between gold and NFP is not clearly defined, in the short term, it could serve as an indicator and a trading opportunity.

NFP and the US macroeconomy

The non-farm payroll, often referred to as the NFP or the NFP report, is a monthly employment report by the US Bureau of Labor Statistics. It provides an analytical view over the employment situation in the USA, without taking into account non-profit organisations, government, private households and farm employees. Economic data from the NFP have a broad reach over price movement for common financial assets, such as the USD, gold, equities, treasuries, and others. 

By analysing the number of monthly new jobs made available in the country’s economy, various factors are made visible. Some of them include unemployment rate, average hourly earnings, hiring and dismissal, and other metrics. Wage gains are directly related to consumer health, which is crucial to the consumer-driven economy that the US has. Higher wages and employment rate signify a high level of consumer health which acts as a boost to the economy.

Such factors are of key importance to market sentiment, which is how investors perceive a market. Although it depends what the market is, commonly, these metrics remain viable factors for any kind of financial asset within the States.

Gold + NFP? Only if it’s for a short while

Gold is an asset that has been around for many centuries. Its independency from any country’s regulation is the reason it grabs the attention of people looking to invest, as well as large-scale private or corporate investors. At the same time, this feature of gold makes it a potent financial instrument for trading. The US has an economy that spans widely and macroeconomic conditions can affect the price of gold, and so can expectations of the results that could temporarily bring down gold’s value.

As already mentioned, the relationship between the price of gold and job gains is not well-defined in the long term. Asa short-term indicator, however, employment figures can impact gold price. Typically, on the release day of the monthly NFP report, the prices of precious metals, including gold and silver, tend to go through a downslide as employment rate increases and have an upturn when the employment situation is not going as well.

The Federal Reserve has control over the interest rates of gold and traders react according to monetary policy implications. Bullish prices of gold can be seen when the US economy is growing. Even so, there are no metrics that always follow the same path – as an example, we can take the time when the NFP report was looking at a decline in employment rates in light of the global pandemic, yet gold prices continued to creep low. 

Trading gold with the NFP report

Reading the NFP report is not mandatory in order to know where the numbers will point. Very often, the results are known before they are announced, so delving into it a bit more can be done simply by waiting until estimates reach a conclusion and alterations are made. More than the numbers themselves, trends are relevant in making use of the NFP’s effect on gold. A 12-month average trend is considered the standard for NFP trend analysis. Generally, you know the economy is doing well if the unemployment rate is low and wages are high. 

When it comes to gold, this applies through the lens of the USD. Positive trending of the NFP produces bullish behaviour in the USD, which is where forex come into place with the currency pairs where the USD is the primary currency in major pairs. Trading the currency market requires taking inflation into consideration – both expectations and concerns – as well as major news from Central banks and a combination between technical and fundamental analysis.

Nonetheless, the NFP report as a factor in gold price movement should be looked at from more than one perspective. In addition to employment rate and sector activity, average hourly wages also can be a sign for investors to reduce or increase stock market positions and hide beneath the umbrella of gold as a hedge against a temporary, or not so much, decline in the overall economy of the US. The relationship between gold and NFP is not clear cut, but it is important to be aware of how much they influence each other. In doing so, traders can focus on major economic trends and develop strategies that make use of being ahead of the curve in the race for gold. 

#source


RELATED

All You Need to Know About Trading in the Best UK Penny Stocks in 2021

Ford, JD Sports, and Monster Beverage were among the many well-known firms that once traded for less than 1 pound a share. Those who bought these businesses...

Why trade cryptocurrency CFDS?

What would you do today if you learned cryptocurrency trading five years ago? Cryptocurrency is a new venue for many people looking for an alternative platform to invest in

All you need to know about cryptocurrency

The market of cryptocurrency is based on supply and demand; thus, it fluctuates widely. For instance, Bitcoin has experienced rapid spikes in December 2017 at $20K...

How to Trade Stocks Online: A 5-step Process to Get You Started

Online stock trading can be confusing to the uninitiated, but newcomers looking to start their investment journey needn’t be put off. Here’s a 5-step guide to get you started...

Understanding ECN and STP Trading

Selecting a trustworthy and reliable broker is a fundamental step in your trading journey. Your trading platform should be your long-term partner, offering essential features and support...

Is MetaTrader 4 good for Crypto?

MetaTrader 4 is used to trade a variety of financial instruments including some of the world’s most popular cryptocurrencies. In this blog, we’ll look at the benefits of using MT4 for crypto trading...

Currency Pairs and Stocks: A Comparative Analysis

Currency pairs and stocks are the most popular assets for day trading, long-term, and medium-term investing. The daily turnover volume on Forex exceeds $5 trillion...

All About Cardano: A Crash Course

Cardano has been one of the best attempts to solve two problems that BTC fails to achieve: scalability and network scalability. But are good intentions...

Unlocking Opportunities in Global Commodity Markets with FXTM’s Advanced CFD Trading

Step into the world of global commodities trading with FXTM, where we offer a gateway to diverse investment opportunities through advanced CFD trading. Experience the flexibility and potential of trading...

A concise guide on investing in Ripple CFDs

Before the advent of digital currencies, man has been using paper or fiat currencies which are controlled by governments or central banks, restricted by location...

How "Stable" Really Are Stablecoins?

Over the past month, some major stablecoins completely lost their peg with the U.S. Dollar, raising concerns amongst investors about their safety. Stablecoins are designed...

How to make money on meme stock?

Meme stocks are shares that gained popularity and achieved a cult-like following on social media. As a result, private investors in online communities can create hype and influence the price of individual shares...

How to Predict Price Movements in the Forex Market in 2022

Many beginning traders do not understand why forex forecasts are necessary. However, analysis of financial markets has been and remains the main guarantee of success of a forex trader. So, how to make an accurate forecast?

How to Short Ethereum?

Want to profit from falling prices in ETH? Then you’re in the right place. In the following article, we’ll explain what shorting means, how to short Ethereum, and how you can profit...

ETFs vs Mutual Funds: Similarities, Differences and the Know-Hows

Exchange-traded funds (ETFs) and mutual funds have a lot in common. These two funds both pool investor investments into a combination of securities such as bonds, commodities, and stocks...

US Stock Indices: The Past and the Present

There is a saying in the world of finance: "America will sneeze, but the whole world will catch a cold." But what is the way to determine how serious...

What is hedging? Protecting assets from market storms

Hedging in the financial markets is one of the risk management techniques. It’s a sort of insurance cover to protect against potential losses from an investment...

A Guide to Trading Metals

Precious metals such as gold and silver have been recognised as valuable metals for a long time, but gold and silver are not the only ones out there for investors

Automating Your Forex Trading

As the forex market moves enthusiastically into the electronic age...

The Complexities and Nuances of Touch Trading: A Comprehensive Analysis

Touch trading, a strategy employed in the volatile world of forex trading, is a sophisticated approach that requires traders to enter the market at a precise intersection of live price impact with a predetermined price level...

FP Markets information and reviews
FP Markets
81%
RoboForex information and reviews
RoboForex
77%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.