Why does gold remain supported on the eve of non-farm data amid bullish and bearish indecision in the market despite a strong US dollar

Non-farm payroll data is about to be released, and this key economic indicator has become the focus of the current market. Amid the wait-and-see sentiment before the data release, gold, the US dollar, and Federal Reserve policies form a delicate triangular relationship, leaving investors caught in a dilemma of whether to go long or short.

Why is Non-farm Data So Critical

US non-farm employment data directly reflect the health of the labor market and are an important reference for the Federal Reserve in setting monetary policy. According to the latest news, market expectations for further rate cuts by the Federal Reserve are heating up, and the results of the non-farm data will determine whether this expectation can be validated.

Strong employment data may delay the Fed’s rate cut pace, while weaker data could reinforce expectations of rate cuts. This uncertainty leads traders to generally adopt a wait-and-see attitude before the data is released, reluctant to make new directional bets.

The Subtle Balance of Bull and Bear Forces

Currently, gold is showing a typical range-bound oscillation pattern, driven by two opposing forces:

Downward Pressure

• The US dollar has continued its two-week rally, reaching a one-month high
• A strong dollar usually depresses gold prices denominated in USD
• Safe-haven sentiment ahead of the data release drives the dollar higher

Upward Support

• Market expectations for further rate cuts by the Federal Reserve are heating up
• Expectations of rate cuts weaken the attractiveness of the dollar, benefiting gold
• Ongoing geopolitical uncertainties maintain safe-haven demand
• Gold’s status as a traditional safe-haven asset remains solid

This intertwined fundamental background means that gold lacks strong bearish momentum, and investors are choosing to wait for key data to break the deadlock.

Potential Market Impact of Non-farm Data

Noteworthy Points

The current market is in a data vacuum period, with most participants adopting a “wait-and-see” strategy before acting. This results in relatively light trading volume and limited gold price volatility. However, once the non-farm data is released, the market could experience rapid directional adjustments.

According to analyst Haresh Menghani, although gold experienced a slight decline during the European session, the lack of strong bearish momentum indicates that the bulls are still holding firm. This stalemate is expected to be broken after the non-farm data is announced.

Summary

Non-farm employment data has become the “bellwether” of the current market. The short-term strength of the US dollar and rising market expectations for Fed rate cuts place gold in a delicate balance. Investors’ cautious stance reflects market uncertainty, which will be partially resolved at the moment of data release. Future focus should be on the strength or weakness of the data itself and the market’s re-pricing of the Federal Reserve’s policy path.