Gold Price Talking Points
The price of gold[1] trades to a fresh weekly high ($1910) as the Federal Reserve[2] lays out a preset course for monetary policy, and the precious metal may stage a larger advance over the coming days as it reverses course ahead of the 200-Day SMA ($1835).
Gold Price Recovery Materializes Ahead of US NFP Report
The price of gold extends the series of higher highs and lows from earlier this week as the Federal Open Market Committee[3] (FOMC) plans to normalize monetary policy in a “predictable manner,” and it seems as though the central bank is in no rush to push its balance sheet towards pre-pandemic levels as the “Committee intends to slow and then stop the decline in the size of the balance sheet when reserve balances are somewhat above the level it judges to be consistent with ample reserves.”
As a result, the advance following the FOMC rate decision raises the scope for a larger recovery in the price of gold as Chairman Jerome Powell warns of the “imbalance between supply and demand in the labor market,” and the US Non-Farm Payrolls (NFP[4]) report may keep the Fed on its current path as the update is anticipated to show a slowdown in job growth.
The NFP report is expected to show the economy adding 391K jobs in April following the 431K expansion the month prior, while the Unemployment Rate is seen narrowing to 3.5% from 3.6% during the same period. The update may do little to derail the recent advance in the price of gold as the Fed acknowledges that “labor supply remains subdued,” but evidence of a tightening labor market may keep Chairman Powell and Co. on track to deliver
