"Gold Eases but Eyes Weekly Gain; US Payrolls Data on Tap"

Gold prices have been on a rollercoaster ride this week, with investors closely watching the US non-farm payrolls data due to be released later today. The precious metal has seen a slight pullback but is still on track for a weekly gain, driven by a mix of economic uncertainties and geopolitical tensions.

The anticipation of the US payrolls data has been a significant factor influencing gold prices. Historically, gold has shown a stronger reaction to disappointing jobs reports compared to upbeat ones. For instance, on average, gold moved up by $6.87 if the NFP reading fell short of market consensus, while it declined by $4.68 on positive surprises. This trend is supported by the fact that gold is often seen as a safe-haven asset, and a weaker-than-expected jobs report can drive investors towards gold as a hedge against economic uncertainty.



The recent volatility in gold prices has been driven by several key factors, including geopolitical tensions and economic data releases. One of the most significant factors is the uncertainty surrounding US President Donald Trump's tariff policies. For instance, on Thursday, gold inched up due to a pullback in the U.S. dollar, as investors awaited U.S. non-farm payrolls data to assess the Federal Reserve's interest rate trajectory. The U.S. exempted automakers from the 25% tariffs on Canada and Mexico for a month, which pushed the dollar lower and supported gold prices. Trump's tariffs have strained relations with Canada, Mexico, and China, leading to safe-haven demand for gold. This was evident when worries over Trump's tariff policies pushed safe-haven gold to a record high of $2,956.15 on February 24 and helped it gain more than 11% year-to-date. Gold is considered a hedge against political uncertainties and inflation, and the $3,000 psychological level for gold appears increasingly within reach as prices resume their upward trajectory following a brief retracement.

Another key factor is the release of economic data, such as the Nonfarm Payrolls (NFP) report. The NFP report is considered the most important economic indicator for forex traders and is closely correlated with the overall performance of the economy. For example, the February jobs report is expected to show a gain of 160,000 jobs, which could impact gold prices. Historically, gold's price has shown an inverse correlation with NFP surprises, with gold moving up by $6.87 on average if the NFP reading fell short of market consensus and declining by $4.68 on average on positive surprises. However, this correlation weakens slightly by the fourth hour after the release, as investors look to book their profits toward the London fix, causing gold to reverse its direction after the initial reaction.

In the coming weeks, these factors could evolve in several ways. Geopolitical tensions could escalate or de-escalate, depending on the outcome of trade negotiations and other diplomatic efforts. Economic data releases, such as the NFP report, could continue to drive volatility in gold prices, as investors react to the latest economic indicators. Changes in monetary policy, such as interest rate hikes or cuts, could also impact gold prices, as higher interest rates make non-yielding assets like gold less attractive. Additionally, the underlying details of the jobs report, such as wage inflation, could influence gold prices, as investors assess the potential impact on inflation and monetary policy.

Investors can employ several strategies to navigate these uncertainties. One approach is to monitor geopolitical developments and trade policy announcements closely. For instance, the market's anticipation of the non-farm payrolls report, which is expected to show a gain of 160,000 jobs for February, is a key event that can influence gold prices. Another strategy is to use technical analysis to identify trends and patterns in gold prices. For example, the 14-day Relative Strength Index (RSI) has stalled its descent to turn higher, currently near 64, pointing to additional upside. Gold buyers could retest the all-time highs at $2,956 if the rebound gathers steam. The next topside barriers are seen at the $2,970 resistance and the $3,000 threshold. On the flip side, the immediate support is seen at the $2,900 round level, below which the 21-day SMA at $2,883 will be challenged again.

Additionally, investors can diversify their portfolios to include other safe-haven assets, such as silver, platinum, and palladium, which can also benefit from geopolitical uncertainties. For example, spot silver was little changed at $32.60 an ounce and platinum was largely flat at $965.23, while palladium fell 0.3% to $939.25. This diversification can help mitigate risks associated with any single asset.

In summary, geopolitical tensions and trade policies significantly impact gold as a safe-haven asset. Investors can navigate these uncertainties by closely monitoring geopolitical developments, using technical analysis to identify trends, and diversifying their portfolios to include other safe-haven assets.