Critical data for gold to be released today

In the gold market, eyes are turned to the September employment report from the US on the final trading day of the week. The data, to be released by the US Bureau of Labor Statistics at 15:30 Turkey time, will be the main agenda for markets regarding both movements in the dollar and bond yields, as well as expectations for the Fed's upcoming meetings.

Spot gold is priced at 4,155 dollars in Asian trading, and the precious metal is heading toward a weekly loss exceeding 3 percent. This strengthens the possibility of a second consecutive weekly decline for gold. In recent days, the rise in US bond yields and the strengthening of the dollar have been putting pressure on gold, which does not offer interest income.

Market expectations are for non-farm payrolls to increase by 90 thousand in September. Employment growth was 162 thousand in August. The unemployment rate is expected to remain at 4.1 percent, while average hourly earnings are expected to rise by 0.3 percent monthly.

TWO SCENARIOS EMERGE BASED ON THE DATA

If employment growth comes in significantly above expectations, the unemployment rate remains low, and wage growth remains strong, the perception that the US labor market is resilient could strengthen. This picture could support expectations that the Fed may keep interest rates higher for longer, potentially pushing bond yields and the dollar upward. In such a scenario, it is assessed that pressure on gold prices toward the 4,000 dollar level could increase.

Conversely, if employment remains below 90 thousand, an increase in the unemployment rate is observed, or wage growth weakens, the pressure on the Fed to maintain a hawkish stance could ease. In this case, a decline in bond yields and a weakening of the dollar could reduce the selling pressure on gold, opening space for a short-term recovery.

Among the main factors suppressing gold prices are the US 10-year bond yield reaching its highest level since 2002 at 5.34 percent this week, and the Dollar Index reaching a 17-month high. A strong dollar makes gold more expensive for investors using other currencies.

Markets will reprice expectations for the Fed's meeting to be held on October 27-28 following the employment data. Another critical topic in October will be the US consumer inflation data to be released on October 14.

Although the pressure of high interest rates and a strong dollar stands out in the short term, central bank demand for gold continues to be a supporting factor for prices. According to World Gold Council data, central banks made net purchases of 23 tons of gold in July and a total of 130 tons in the first seven months of the year.

News Source: 12punto