Gold price forecast with the US NFP data in focus

Gold price ended March in good shape to record the best quarter since mid-2020 at the peak of the COVID-19 pandemic. Investors are keen on the non-farm payrolls data amid the heightened inflationary pressures and the Fed’s aggressive tone.

Fundamentals

Heightened inflationary pressures and the ongoing Russia-Ukraine crisis have continued to boost gold futures as investors seek a safe investment. Data released by the US Commerce Department on Thursday showed that consumer spending grew at a slower pace in February at 0.2% compared to January’s 2.7%. The easing in spending stems from the high inflation that has been escalated by the crisis in eastern Europe.

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Consumer prices have hiked to the highest level in four decades. The Federal Reserve has adopted an aggressive tone in its plan to deal with inflation. Indeed, it has hinted at an interest rate hike of 50 basis points in coming meetings if needed.

On the one hand, an environment of high interest rates is usually bearish for gold price. Even so, concerns over a probable recession continue to support the precious metal. With regards to nonfarm payrolls, analysts expect the addition of 490,000 jobs compared to 678,000 in February.  

Gold price forecast

Since the beginning of the year, gold futures have rallied by close to 8%. In March alone, it has been up by close to 2%. On Thursday, it hit an intraday high of 1,950.50; boosting it towards its best quarter since the peak of the coronavirus pandemic about two years ago.

Gold price was at 1,934.30 as at 06:33 a.m GMT. On a daily chart, it is hovering around the 25-day EMA. Besides, it is still above the 50-day EMA. In the ensuing sessions, it will likely remain subject to price swings with the forces of inflation, safety, and rate hikes at play.

Ahead of the non-farm payrolls on Friday, I expect the precious metal to continue finding resistance at around 1,950.50. If the data substantiate the narrative of a strong labor market, gold price may drop to find support at around 1,915.86. Even with the probable decline, 1,900 will likely remain a steady support zone in the short term.