Article by: ETO Markets

When the important US labour market data is released, gold traders should prepare for a jump in volatility. The NFP figure is predicted to come in at 180K for January, and average hourly earnings are predicted to rise at an annual rate of 4.1% during that time. The US Federal Reserve's reluctance to cut interest rates early is expected to be supported by a stronger-than-expected NFP print and unexpectedly positive wage inflation data. This will likely give US Treasury bond yields a boost and push the US Dollar back toward multi-week highs versus its major peers.

Technically speaking, bulls may now hold off on making new bets until they see some follow-through buying above the $… region or until a one-month high was touched on Thursday. The daily chart's oscillators have only recently begun to show signs of strength, so the price of gold may then pick up speed and move closer to $… which is the January peak.

Conversely, the 50-DMA which is currently positioned close to the $…, appears to be protected from the immediate downside by the strong horizontal resistance breakpoint around $... In order to reach the psychological $… level, the price of gold might be driven to $… by a strong break below the latter.