Trading gold prior to Non-Farm Payrolls
The technical overview remains volatile given the uptick in intraday price action combined with record highs, while in sentiment still a story of majority long bias among both clients and institutional traders.
Plenty of factors have been cited as the cause in getting gold prices to record highs and in such a swift manner including (1) rising uncertainty, (2) shifts on the geopolitical front, (3) Federal Reserve (Fed) independence put into question and where it would result in a more dovish monetary policy, (4) central bank purchases looking to shift away from the greenback and Treasuries, (5) ETF flows, and (6) rising yields that under normal conditions would hurt the non-yielding metal but if due to fiscal worries means investors would shift away from long-term debt and seek a different haven that can hedge against fiat currency and more so if monetizing the debt becomes the norm.
Multiple factors usually mean an uptick in volatility, but that can go both ways meaning any resolution of one even if unlikely could see at least a partial undoing. In terms of FOMC (Federal Open Market Committee) members speaking yesterday, there was Kashkari that a neutral rate at 3% means they can ease “gently” and how essential Fed independence is to a healthy economy, and Musalem who thinks they “should be cutting by the next meeting”. There’s still the drama surround Fed Governor Cook, the latest update on that front that Republican senators aren’t considering a replacement until the lawsuit regarding her firing is resolved. The Fed’s Beige Book was released yesterday, where it noted declining consumer spending and showed little to no growth for most districts.
In terms of economic data out of the US releasing yesterday, there was factory orders for the month of July down 1.3% m/m (month-on-month) after contracting 4.8% in June, job openings (out of JOLTS) worsening to 7.181m from 7.357m and below forecast, and the weekly mortgage applications suffering another pullback even if modest. Expect more labor data today with the weekly claims, Challenger’s job cuts and ADP’s non-farm estimate before the market-moving Non-Farm Payrolls tomorrow.
Expectations are we’ll see growth of 75K for the month of August similar to the gains we saw in July that were a clear miss and came with nasty revisions. It won’t end there, with focus on the household survey from which the unemployment rate is taken from to see if it’ll rise to the expected 4.3%. Should the results come in weaker than anticipated and it’ll solidify rate cuts out of the Fed and a potential USD weakening, while the opposite could hurt chances of rate reductions if not in this month’s FOMC meeting then in the following ones.
Gold’s technical overview, strategies and levels
Looking at the daily time frame and price is above all its main moving averages (MA), still walking the upper end of the Bollinger Band even after the pullback in price this morning, on the DMI (Directional Movement Index) front the +DI far and above the -DI translating into a positive DMI, an RSI (Relative Strength Index) in overbought territory even if not as strong a reading as yesterday, and an ADX (Average Directional Movement Index) reaching trending territory.
While that usually translates into something bullish when it comes to its technical overview, the clear uptick in volatility and edginess when it experiences record highs translates into a more ‘volatile’ overview where breakout strategies are in the conformist camp and reversal are for contrarians but ideally after a significant reversal to avoid getting stopped out. Strategies under a ‘bull average’ overview would be buys off the 1st Support only after a significant reversal and the 1st Resistance via breakout for conformists, while contrarians would look to sell at those two but only via reversal if going against a rising spear.
Zooming out to the weekly time frame and the technical overview was and still is ‘bull average’. It has already breached this week’s weekly 1st Resistance level (which is updated every Monday in Capital.com’s Daily Market Report) giving conformist buy-breakouts the clear edge while stopping out contrarian sell-after-reversal strategies.
Capital.com’s client sentiment for Gold
Client sentiment is usually majority buy when it comes to gold, though in times of gains in price sees longs close out only to attempt to reinitiate if the trend continues in order to avoid missing out on further highs. They’re no longer in extreme buy territory as was the case back when gold prices were hovering in the $3,320s (see green-dotted client sentiment mapped on the chart below), though they have raised it from a slight buy 53% to a moderate 57% as of this morning. Even if a shift were to occur, it’s rare to see trader sentiment majority short in gold for a long period of time.
In terms of CoT (Commitment of Traders) speculators, they were and remain net long and in extreme buy territory, with last Friday’s report showing they upped their bias a notch to 82% last week before the climb on a rise in long positions (by 490 lots) and a simultaneous drop in shorts (by 1,231).
Client sentiment mapped on the daily chart<
Source: Capital.com
Period: JULY 2025 – AUGUST 2025
Past performance is not an indicator of future results.
Gold’s chart on Capital.com platform with key technical indicators
Source: Capital.com
Period: JULY 2025 – AUGUST 2025
Past performance is not an indicator of future results.