Gold is holding steady around $3,300 as the markets await the US Nonfarm Payrolls (NFP) report. The US Dollar remains strong due to a hawkish Federal Reserve and positive economic data, while new trade tensions from US tariffs add some support for gold. Gold is trading close to $3,300. Its gains are limited by the strong US Dollar after the Federal Reserve decided to keep interest rates steady and indicated future increases based on economic performance. Positive US economic indicators, such as GDP growth and a solid job market, continue to boost the dollar, affecting gold prices.

The Impact Of The NFP Report

Everyone is watching the NFP report closely, as it will impact gold and expectations for interest rates. While gold bounced back on Thursday, it struggled to hold its gains due to the dollar’s strength and is trading below $3,300, although trade tensions are providing some support. President Trump’s executive order has imposed tariffs between 10% and 41% on 70 countries, starting August 7. This heightens trade tensions, especially since tariff discussions with China and Mexico are still ongoing. Gold and Treasury yields are under pressure from strong US economic data. The likelihood of a rate cut in September has dropped to 39%, while the probability of a 25 basis point cut in October is now at 47%. Gold remains in a holding pattern, awaiting the NFP data, with support and resistance levels defining its trading range. Gold’s technical indicators show market uncertainty, with prices consolidating within a tight range. The NFP report could shift gold’s direction, as its effect on the US Dollar will influence market sentiment. Gold is currently caught in a tug-of-war around the $3,300 mark. The strong US dollar, driven by a confident Federal Reserve, is pulling prices down. In contrast, the threat of new tariffs is providing some upward pressure. The market is anxious about the upcoming Nonfarm Payrolls (NFP) report, which could break this stalemate.

Potential Market Moves After The NFP Report

If today’s NFP report reveals job growth significantly above the expected 190,000, we anticipate a notable strengthening of the US Dollar. This would support the Fed’s hawkish approach and could push gold prices below the $3,280 support level. Traders may view this as an opportunity to consider bearish strategies, such as buying put options in the coming weeks. Conversely, a weak jobs report would challenge the view of a strong economy and increase the likelihood of a rate cut in September. This could weaken the dollar and allow gold to break through the $3,325 resistance level, making call options appealing for potential upside. We observed a similar trend in early 2024, where signs of a slowing job market consistently led to increases in gold prices. Additionally, we must keep the new tariffs starting August 7 in mind. These create a foundation of support for gold, as uncertainty usually boosts its appeal as a safe haven. Historical trade disputes show that tariff announcements often led to short-term spikes in gold prices, even amid strong economic data. This environment of conflicting influences suggests that volatility is likely to increase. The Gold Volatility Index (GVZ) is already up to 18.5, indicating that options traders are bracing for a significant price movement in either direction. Given this setup, strategies that benefit from volatility, such as a long straddle, may be worth considering as we approach the NFP release and the tariff deadline. Once the dust settles from the jobs report, we will quickly shift our focus to how the market adjusts expectations for a Fed decision on rates. We must watch whether the current 39% chance of a September rate cut falls or rises. This shift in market sentiment will guide our derivative trading strategies for the rest of August. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now