24K99 News On Friday (January 10), spot gold maintained an intraday rebound trend. Currently, the price of gold is around 2,675 US dollars/ounce in the Asian market. On this trading day, investors will welcome the US non-farm payrolls report, which is expected to trigger major developments in the gold market. FXStreet analyst Eren Sengezer recently wrote an article analyzing the reaction of gold prices to the non-farm payrolls report.

Sengezer notes that the US in DecemberNumber of people employed in non-agricultural industriesAn increase of 0.154 million people is expected. Compared to an optimistic oneNon-farm payrolls dataGold's reaction to disappointing employment data is likely to be stronger.

At 21:30 Beijing time on Friday, the US will release the December non-farm payrolls report. According to an authoritative media survey, the number of non-farm payrolls in the US will increase by 0.16 million in December last year, while it surged by 0.227 million in November. Furthermore, the US unemployment rate is expected to remain at 4.2% in December. Furthermore, the average hourly wage in the US is expected to rise 0.3% month-on-month in December, compared to a 0.4% increase in November. Wage growth is likely to remain at 4% per year.

Furthermore, according to FactSet statistics, the median estimate of the total number of people employed in non-farm payrolls in the US in December 2024 was 0.153 million. FactSet Research Systems is a financial data and software company headquartered in Novak, Connecticut, USA, providing relevant financial data and analysis to analysts, securities managers, and investment bankers at major financial institutions around the world.

Notably, a report released on Thursday showed that the number of recruitment plans issued by US employers last year fell to the lowest level since 2015, confirming a significant slowdown in employment growth over the past year.

According to data from global human resources company Challenger, Gray & Christmas, the total number of recruitment plans announced by companies in 2024 was 769,953, a decrease of 1.3% compared to 2023. The number of job announcements dropped to 7,999 in December, down from 11,621 in November. The slowdown in recruitment is thought to be the main reason for the slowdown in employment growth last year. The unemployment rate rose from 3.7% at the beginning of the year to 4.3% in July, then stabilized at 4.2%.

Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said, “The slowdown in recruitment reflects economic uncertainty and employers' cautious approach to expansion plans. Most employers expect more uncertainty once the new government takes office, which has led to a slowdown in recruitment.”

Furthermore, on Wednesday, the US ADP private sector employment data for December, known as “small non-farmers,” was released, showing a trend where the growth rate of jobs and salary increases in the US are slowing down at the same time.

According to the ADP report, 0.122 million new jobs were added in December after seasonal adjustments, down from 0.146 million in November, and lower than the 0.136 million expected by economists. This is the smallest increase since August last year.

ADP chief economist Nela Richardson said that the labor market growth rate slowed in the last month of 2024, and both recruitment and salary growth slowed. Healthcare performed well in the second half of this year, creating more jobs than any other industry.

Here are the highlights of Eren Sengezer's article:

Historically, how much impact did the US employment report have on the price of gold? In this article, we present the results of a study in which we analyzed the reaction of gold prices to the previous 35 non-agricultural data. (Note: We omitted the non-farm data for March 2023, which was released on the first Friday of April, and there was little fluctuation due to Easter.)

We presented our findings when the US Bureau of Labor Statistics is due to release the December employment report on January 10 (Friday). Non-farm payrolls are expected to increase by 0.154 million in December, after an increase of 0.227 million in November.

Analytical methods

We plotted the gold price response within 15 minutes, 1 hour, and 4 hours after the release of the non-agricultural data. We then compare the reaction of gold prices to deviations between actual non-agricultural results and expected results.

We use the FXStreet Economic Calendar (FXStreet Economic Calendar) to calculate bias data because it assigns each macroeconomic data release a deviation point to show how much the actual data differs from the market consensus. For example, the number of non-farm payrolls increased by 0.243 million in April 2024, far short of expectations, with a deviation of -1.28. On the other hand, the non-farm payroll data for September 2023 was 0.246 million, higher than market expectations of 0.17 million. This is a positive surprise (positive surprise). The deviation of this data is 2.66. The better-than-expected US non-farm payrolls data is seen as beneficial to the dollar, and vice versa.

Finally, we calculate the correlation coefficient (r) to find out which time period has the strongest correlation between gold and non-agricultural accident conditions. When the r value tends to -1, it indicates a significant negative correlation, and when the r value tends to 1, it indicates a significant positive correlation. Since gold is denominated in dollars, an optimistic non-agricultural report should lead to lower gold prices and point to a negative correlation.

(Photo Credit: FXStreet)

Analysis results

Of the 35 previously released non-agricultural data, 9 fell short of expectations, and 26 were better than expected. On average, in terms of disappointing data, the deviation was -0.64, and the strong data was 1.47. Fifteen minutes after the data was released, if the non-farm payrolls data fell below market consensus, the average price of gold rose by 7.13 US dollars. On the other hand, if the data were better than expected, the price of gold fell by an average of $5.22. The findings suggest that investors are likely to respond more strongly to weaker than expected non-farm payrolls data.

The correlation coefficient we calculated for the different time frames mentioned above did not come close to what is considered significant -1. The strongest negative correlation occurred 15 minutes and 1 hour after publication. The r value was around -0.57. 4 hours after publication, the r value rose to -0.46.

(Photo Credit: FXStreet)

Several factors may play a role in weakening the unexpected negative correlation between gold and non-farm payrolls data. A few hours after the release of the non-farm payrolls data on Friday, investors may be seeking a profit settlement close to the London fixed price, causing the gold price to reverse the trend after the initial reaction.

(Photo Credit: FXStreet)

More importantly, potential details of non-farm payrolls reports, such as wage inflation and labor force participation rates measured by average hourly wages, may have an impact on market responses. The Federal Reserve is adhering to its data-reliant approach. Overall non-farm payroll change data, plus these other data, may drive the market to price the Fed's next policy actions.

Furthermore, revisions to previous data may distort the impact of recently published data. For example, the number of non-farm payrolls increased by 0.275 million in February 2024, far exceeding market expectations of 0.2 million. However, the increase of 0.335 million in January was revised to 0.229 million, which prevented the dollar from benefiting from the positive February data.

At 11:30 Beijing time, spot gold was reported at US$2674.60 per ounce.