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Gold Price (XAU/USD) Slammed by Hawkish Fed and Strong NFP Report

Gold Price (XAU/USD) Slammed by Hawkish Fed and Strong NFP Report

Nick Cawley, Senior Strategist

Gold Price (XAU/USD), Chart, and Analysis

  • Gold is under heavy pressure as UST 2-year yields hit a fresh 15-year high.
  • The Fed is not going to change course and that’s bad news for gold.
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Unemployment Rate Dips as Jobs Growth Stays Solid, What Now for Stocks, Dollar?

The nascent gold rally ran into a brick wall at 13:30 BST Friday when the latest US Jobs Report showed the labor market in seemingly robust health. The non-farm payroll data for September showed 263k new jobs created, beating market expectations of 250k. While the beat is marginal, the closely watched unemployment rate (U3) fell to 3.5% from a prior month’s 3.7%, beating analyst’s expectations of 3.6%.

The ongoing strength of the US jobs market leaves little in the way to prevent Fed chair Jerome Powell from hiking interest rates higher and faster as the central bank doubles down on runaway inflation. Next week’s US CPI data - Thursday, October 13 at 13:30 BST - will be the next driver for US Treasury yields and, by extension, gold. Federal Reserve members have been out in force over the last week all pretty much singing from the same song sheet: interest rates need to continue to rise as fast as necessary to bring price pressures under control, even if that means inflicting a degree of damage on the jobs market and the economy.

For all market-moving data releases and events, see the DailyFX Economic Calendar.

The yield on the interest-rate sensitive UST 2-year jumped after the NFP release, touching a fresh 15-year high.

US Treasury 2-Year Yield Monthly – October 7, 2022


Chart via TradingView

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The recent uptick in gold from the $1.617/oz low to the $1,730/oz. high is now being eroded away with the precious metal back around $1,700/oz. The chart outlook remains negative with an unbroken series of lower highs and lower lows weighing on sentiment. Below here, there is an area of support between $1,660/oz. and $1,680/oz. which may slow any further declines in the short term, but until the Fed decides to pivot away from hiking interest rates, the path of least resistance for gold is lower.

Gold Daily Price Chart – October 7, 2022


Chart via TradingView

Retail Traders Shuffle Their Positions

Retail trader data show that 74.84% of traders are net-long with the ratio of traders long to short at 2.97 to 1. The number of traders net-long is 3.52% higher than yesterday and 8.96% lower from last week, while the number of traders net-short is 3.93% lower than yesterday and 20.47% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Gold trading bias.

Gold Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 0% 0% 0%
Weekly 17% -23% 4%
What does it mean for price action?
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What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.