Gold price hovers around $1,820 ahead of key US labor market data

• Gold price trades back and forth as investors await US official Employment data.
• Taking cues from the US ADP Employment report, job creation is foreseen to slow.
• Fed’s Daly sees no more rate hikes if the labor market slows and inflation remains close to 4%.

Gold price (XAU/USD) remains directionless, trading at around $1,820, as investors keenly await the United States Nonfarm Payrolls (NFP) data for September. The employment report will set an undertone for the Federal Reserve’s (Fed) upcoming monetary policy decision in November. US labor market conditions are seen softening further considering weak cues from the ADP Employment report released earlier this week, but the outlook is uncertain.

Soft Nonfarm Payrolls data is expected to ease selling pressure in the US Treasuries and would improve the appeal for Gold. Apart from that, expectations of one more interest rate increase from the Fed in the remainder of 2023 would vanish. However, a further acceleration in wage growth would discomfort Fed policymakers and spur consumer inflation expectations.

Daily Digest Market Movers: Gold price awaits US labor market data

• Gold price delivered a bearish closing for nine trading sessions in a row as investors see interest rates remaining higher for a prolonged period.
• The precious metal remained under pressure despite a soft US Services PMI report and further evidence of cooling labor market conditions.
• On Wednesday, ADP reported that the US private-sector added  89K jobs in September, half the number it reported in August. Job growth in the leisure and hospitality sector remained robust, while lay-offs were witnessed in the manufacturing and transportation sectors.
• "We are seeing a steepening decline in jobs this month"."Additionally, we are seeing a steady decline in wages in the past 12 months," Nela Richardson, chief economist at ADP, said.
• US Services PMI for September remained in line with estimates at 53.6, but the New Orders component came in significantly lower at 51.8 against the former release of 57.5. Being a proxy to the US service sector, which accounts for two-thirds of the US economy, a poor demand outlook could weaken the appeal for the US Dollar.
• The US Dollar Index (DXY) has corrected to near 106.30 from its 11-month high of 107.35. Still, the broader outlook will be shaped by the Nonfarm Payrolls data, which will be published at 12:30 GMT.
• US employers are expected to have added 170K employees in September, lower than the 187K jobs created in August. The jobless rate is expected to fall a tick to 3.7% from August reading of 3.8%.
• In addition to the jobs data, investors will watch the Average Hourly Earnings data. Annual wages are expected to grow at a steady pace of 4.3%. On a monthly basis, labor earnings are seen expanding at a higher pace of 0.3% compared with the 0.2% jump recorded in August.  Strong wage growth could accelerate consumer inflation expectations.
• Economists at ING said that a strong NFP read could easily put markets back on a bearish track and reignite aggressive Dollar buying.
• Meanwhile, the weekly jobless claims for the week ending September 29 remained broadly unchanged. Individuals claiming jobless benefits for the first time increased marginally to 207K from the former reading of 205K but lower than expectations of 210K.
• The US Treasuries faced an intense sell-off this week due to the collaboration of expectations that interest rates will remain high amid a resilient US economy and concerns over rising fiscal deficits. 10-year US Treasury yields trades around 4.73%.
• Chicago Federal Reserve Bank President Austan Goolsbee sees no more upside in Treasury yields and expects the US economy to remain on the ‘golden path’ towards 2% inflation goal.
• About the interest rate outlook, San Francisco Fed Bank President Mary Daly said that another rate hike  may not be needed if the labor market slows, inflation remains around 4% and financial conditions remain tight.

Technical Analysis: Gold price trades directionless above $1,810

Gold price oscillates inside Thursday’s trading range as investors await the US labor market data for further guidance. The precious metal strives for a direction, which will likely be set after the release of the NFP report. A death cross, represented by the 50-day and 200-day Exponential Moving Averages (EMAs) at $1,905.00, warrants more downside. Momentum oscillators have turned extremely oversold.