ADP's shocking figure of only 22,000! How will gold move on the eve of non-farm payrolls?
The recently released January ADP employment figure in the U.S. is only 22,000 (previous value 41,000, expected 48,000), which is significantly lower than expected—signals of a “cooling” job market are clearer now.
How does the market usually interpret such data?
Weak job market → Rising expectations for interest rate cuts → Pressure on the dollar → Easier for gold to strengthen
So tonight's key phrase is not “the data itself,” but—can the narrative of interest rate cuts continue to ferment?
But note: ADP is just the “appetizer,” the real volatility is yet to come.
The most common trend on the eve of non-farm payrolls is: first a rise, then a washout, it's normal to sweep stop losses back and forth, don't get carried away by emotions.
I am more concerned with two things:
1) After the data is released, can gold hold the key support (not retracing = strong)
2) Is the dollar/U.S. Treasury yield continuing to weaken (this is the “fuel” for gold to continue its ascent)
In short: The worse the ADP, the more the market dares to bet on interest rate cuts, and the better the prospects for gold.
Tonight, don’t chase highs or panic sell, focus on buying the dips and riding the trend.
$XAG
$XAU
