Nonfarm Payrolls Effect on Gold Price
XAUUSDKey Economics Highlight in the first week of 2023 - Nonfarm Payrolls and Unemployment Rate for December 2022 were reported on 6th January 2023.
- Nonfarm payrolls increased by 223,000 which is higher than what the market was expecting by 200,000.
- The unemployment rate fell to 3.5%, which was lower than the consensus of 3.7%.
On the night of January 6, 2023, this report had a significant positive impact on various financial assets especially Gold. Gold prices rose from 1,836 USD to 1,850 USD within 10 minutes of the reporting and it made a higher high on the weekly candle at 1,869.9 USD before closing the week at 1,866.1 USD
Technically, Gold price almost reach its significant supply zone at around 1876.5 USD. Therefore, it would not be surprising to see the gold price drops to the first support level or trade in the range of 1825 - 1876 for a while.
Fundamentally, the current US workforce participation rate still has not reached the Pre-Covid19 level and the contribution of workforce participation in US consists more aging population which could be problematic for future economy growth as there could be more labor demand but less supply since more people are going into being retired.
Therefore, it seems like the market has overreacted to this report in short term. But, speculators and investors must still continue to manage their risks based on the inflation rates and potential recession of US economy
Let us know what you guys think!~
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