Where are gold prices headed? the future of NFP is the key

Gold prices fell slightly earlier in the week and are currently trading around $2,500 an ounce. Gold is still on hold ahead of Friday’s US non-farm payrolls report, notes Commerzbank commodities analyst Volkmar Baur.

Gold may fall further

“If the report comes in as most analysts expect, according to the Bloomberg survey, Gold could fall further. The futures market still pegs a roughly 30 percent chance that the Fed will cut rates by 50 basis points in September.

“However, if the report shows, as expected, that the labor market continues to cool, but not collapse, that likelihood should be eliminated. On the other hand, if the US jobs report is significantly weaker, speculation of a US recession and faster rate cuts will resurface, further supporting gold. A day after the US employment report, China will also release data on its foreign reserves.”

“As it has been reported several times in recent months that the Chinese central bank has stopped importing gold, an increase in gold reserves would be a surprise that would also support gold prices. However, this is unlikely to happen.”