Understanding NFP. Was it bullish or bearish for Gold?
So, we got December NFP on Friday and here are takeaways:
New Jobs – 145K vs. 165K expected. BIG MISS!
Wage growth – 0.1% vs. 0.3 expected. BIG MISS!
Unemployment: 3.5%, unchanged from November.
I managed to close my Gold position in small profit despite betting on the opposite NFP guess (ready my previous post). Subsequent price action indicated that the bullish spike had to be short-lived. There was also a hint from data about that but what was the key inference? With unemployment at record low of 3.5%, lower-than-expected new jobs count could be affected by WORKERS SHORTAGE, which is a sign of OVERHEATING rather than cooling. Counterintuitive, eh? Yeah we have to read the fine print and in the run up to 4 or 5 previous NFP reports I read many anecdotal stories that firms are struggling to hire. If you want even less evident point about that here it is: At this low unemployment rate, the candidates being hired were likely to be out of labor for a longer time => more time and costs involved for their training what acts as a constraint for hiring and wage growth.
While stagnant wage growth just strengthens the case (that we already know) that Fed won't make policy shifts at least until the end of 2020. No change in expectations - little reaction from the assets side.
That’s why separate reports like December one with no confirmation from the unemployment figure may be discounted by the markets.
Today, Gold is down by 0.40% as the focus shifts to signing ceremony of the US-Sino trade deal. Expect further cooling and price searching for support test on generally calm and positive market sentiments.
Price targets: 1540 and 1535 per troy ounce.
New Jobs – 145K vs. 165K expected. BIG MISS!
Wage growth – 0.1% vs. 0.3 expected. BIG MISS!
Unemployment: 3.5%, unchanged from November.
I managed to close my Gold position in small profit despite betting on the opposite NFP guess (ready my previous post). Subsequent price action indicated that the bullish spike had to be short-lived. There was also a hint from data about that but what was the key inference? With unemployment at record low of 3.5%, lower-than-expected new jobs count could be affected by WORKERS SHORTAGE, which is a sign of OVERHEATING rather than cooling. Counterintuitive, eh? Yeah we have to read the fine print and in the run up to 4 or 5 previous NFP reports I read many anecdotal stories that firms are struggling to hire. If you want even less evident point about that here it is: At this low unemployment rate, the candidates being hired were likely to be out of labor for a longer time => more time and costs involved for their training what acts as a constraint for hiring and wage growth.
While stagnant wage growth just strengthens the case (that we already know) that Fed won't make policy shifts at least until the end of 2020. No change in expectations - little reaction from the assets side.
That’s why separate reports like December one with no confirmation from the unemployment figure may be discounted by the markets.
Today, Gold is down by 0.40% as the focus shifts to signing ceremony of the US-Sino trade deal. Expect further cooling and price searching for support test on generally calm and positive market sentiments.
Price targets: 1540 and 1535 per troy ounce.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.