Trading Gold Going into Non-Farm Employment Change

Trading Gold Going into Non-Farm Employment Change

Is Gold likely to soar or dive after the Non-Farm Employment Change numbers are released on Friday?

Trading Gold going into the Non-Farm Employment change
Trading Gold going into the Non-Farm Employment change Getty Images

Historically, the Non-Farm Employment Change (NFP) report creates extreme volatility in the markets and typically the most volatile is Gold.  The table below shows the last six NFP releases, comparing forecast to actual and the historical high and low for the day, as well as whether the candlestick was bullish (close greater than the open) or bearish (close less than the open).  Additionally, by subtracting the low from the high, the total movement for the day is calculated.

Trading Gold going into the Non-Farm Employment change reportNotice that in June, September, and October the actual NFP numbers were lower than forecast and the candlestick formations were all bullish.  In July and August, the NFP actual numbers were greater than forecast and the candlesticks formations were bearish.  The surprise was in November when the actual NFP numbers were lower than the forecast (previous this type of release created bullish candlesticks).  The December forecast is 200K.  If the actual numbers are greater than the forecast, can traders expect another bearish candlestick reminiscent of July and August patterns? Or if the numbers are lower than the forecast, will the November candlestick repeat or can we expect a bullish candlestick?

Currently, the Gold daily chart shows that price has been in a congestion range since October 2017.  The high of the range is around 1300 and the low of the range is around 1267.  Will the NFP cause Gold to break out of this range? 

Trading Gold Range MarketAs shown in the chart above, the Stochastics is approaching oversold levels, which historically, has pushed Gold upwards toward the high of the range after forming a bullish bar at the low of the range.  Currently, today's candlestick is bullish (which could change at the US open) indicating that price will likely move up.  If the pattern continues then, more likely than not, Gold will begin to move up toward the upper limit of the range.  If by Friday morning, the price is at the upper limit of the range and the Stochastics is not over-extended, then we may see Gold break through this area in the coming days. 

Of course, there is also a possibility that when the US session opens today, Gold will break the support level at 1267 and the next area of support will be the 1229 area.

The information contained above may have been prepared by independent third parties contracted by Nadex. In addition to the disclaimer below, the material on this page is for informational and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument on Nadex or elsewhere. Please note, exchange fees may not be included in all examples provided. View the current Nadex fee schedule. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representations or warranties are given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk and any trading decisions that you make are solely your responsibility. Trading on Nadex involves financial risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results. Nadex contracts are based on underlying asset classes including forex, stock index futures, commodity futures, cryptocurrencies, and economic events.

Trading can be volatile and investors risk losing their investment on any given transaction. However, the design of Nadex contracts ensures investors cannot lose more than the cost to enter the transaction. Nadex is subject to U.S. regulatory oversight by the CFTC.