Gold surges post-NFP, now trading around breakout levels

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Gold poised for a fourth consecutive weekly advance on the heels of Friday‘s US Non-Farm Payroll report. The addition of 235,000 jobs last month, falling well short of forecasts and the smallest jobs gain in seven months, suggests U.S. central bankers will need to see additional gains before starting to slow bond buying.

The advance is challenging a break of a major technical resistance confluence and a breakout may be in the cards as we head deeper into the September trade. Prices need to sustain above $1835 hurdle to head towards $1920.

COMEX Gold Daily Chart

Disappointment over the U.S. August payroll report is all but certain to push Federal Reserve policymakers to delay considering a move to scale back asset purchases at their Sept. 21-22 meeting. A tapering later this year is still the base case, and the data over the next few months will be important in determining when that is announced and the pace of the tapering.

At the July Federal Open Market Committee meeting, most Fed officials agreed it would probably be appropriate to begin tapering the central bank’s $120 billion-a-month bond-buying program before the end of the year, according to a record of the
gathering.

The focus will now turn to economic data released ahead of the Fed’s meeting later this month. Any more indications that the U.S. recovery is stuttering may give the central bank cause to delay tapering its asset purchases. Chair Jerome Powell said last week a reduction in monthly bond purchases could begin this year, with the labour market making clear progress.

Also, Read: Gold breaks out after Jackson Hole
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