Fundamental Forecast for Gold: Neutral

Gold prices inched higher this week with the precious metal nudging up nearly 0.5% ahead of the New York close on Friday. The gains come amid continued volatility in broader markets with all three major U.S. equity indices poised to close lower on the week. For gold, this volatility may keep a floor under prices as risk sentiment begins to deteriorate.

U.S. Non-Farm payrolls showed a gain of just 103K jobs for the month of March with 50K downward revision to the two-month net payroll count. Although unemployment rate held steady at 4.1% (expectations were for a down-tick to 4.0%) the labor force participation rate fell to 62.9% and further highlights the overall weaker tone of the report.

With the unemployment rate at-or-near the central bank’s “natural” longer-running rate, this week’s developments do not change the broader outlook for Fed policy moving forward. Heading into next week however, traders will be eyeing the release of U.S. CPI (Consumer Price Index) and minutes from the latest FOMC policy meeting.

The NFP disappointment adds to mounting concerns regarding the growing threat of a trade war as rhetoric between the Trump administration and China continues to heat up. Traders found solace in the perceived safety of gold with prices reversing sharply off the weekly lows on Friday. But does this mean the correction off the March highs is over? The technicals suggest we’re not out of the woods just yet.