Gold shines brighter after US NFP report

The news shaping the markets today

Ukraine and Russia said that hundreds of enemy troops were killed in the ongoing battle for Bakhmut. Despite this, the safe-haven US dollar index fell this morning.

Irish BNP Paribas Real Estate construction PMI rose to 49.8 in February, versus 47.7 in the prior month, lending support to the EUR/USD forex pair.

New Zealand’s BusinessNZ Performance of Services Index climbed to 55.8 in February, versus a revised reading of 54.7 in January, which sent the NZD/USD pair higher in forex trading this morning.

Brazil’s Industrial Entrepreneur Confidence Index fell by 0.7 points to 49.9 in March, from 50.6 in the prior month, exerting pressure on the BRL/USD forex pair.

US government budget deficit widened to $262 billion in February, versus a $217 billion gap in the year-ago period, which sent the Dow Jones index lower by more than 300 points on Friday.

What’s happening: Gold futures moved higher on Friday, following the release of the much-awaited US nonfarm payrolls report for February.

What happened: The yellow metal received support from the US NFP report, which showed an increase in the country’s unemployment rate.

A decline in the US dollar and Treasury yields sent gold prices higher on Friday.

Why it matters: The US economy added 311,000 jobs in February, following a reading of 504,000 in the prior month. However, the figure was still well above market estimates of 205,000.

The latest reading signalled a tight labour market, with economy creating an average of 343,000 jobs per month over the last six months. A tight labour market gives the US Federal Reserve more flexibility to hike interest rates.

The report followed Fed Chairman Jerome Powell’s hawkish comments at his two-day testimony, which had raised speculations of the central bank increasing rates by 50 basis points at its meeting later this month.

However, the unemployment rate rose to 3.6% in February, from a 50-year low of 3.4% last month and higher than market expectations of 3.4%. The number of unemployed people in the country rose by 242,000 to 5.94 million.

US Treasury yields fell for the second session in a row, indicating a move to safe-haven assets. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell 0.64% to 104.64 on Friday. A decline in the US dollar supports demand for gold, as it makes the yellow metal cheaper for foreign currency holders.

Concerns over the banking sector following a plunge in the stock of Silicon Valley Bank parent SVB Financial Group also sent gold prices higher on Friday.

Gold for April delivery climbed $32.60, or 1.8%, to close at $1,867.20 per ounce, with prices for the safe-haven metal gaining 0.7% for the week. Silver for May delivery rose 1.7% to settle at $20.506 per ounce, down 3.5% last week.

Copper for May delivery slipped 0.2% to $4.0305 per pound, down 0.9% for the week, while palladium for June delivery fell 0.9% to $1,362.30 per ounce and platinum for April gained 1.4% to $962.20 per ounce.

What to watch: Traders will keep an eye on the release of US consumer prices report, which is expected to provide more insight into the Fed’s upcoming rate move. The annual inflation rate, which slowed slightly to 6.4% in January, is expected to ease further to 6.1% in February.

The markets today

The Canadian dollar will be in focus today following the release of the country’s jobs report

Context: The CAD/USD forex pair settled mostly flat on Friday, after recording gains earlier in the session.

Details: Data released on Friday showed Canada’s economy creating higher-than-expected jobs in February.

The Canadian economy added 21,800 jobs in February, exceeding market estimates of 10,000, with employment rising in utilities and public administration healthcare.

The number of unemployed people rose by 20,400 in February, from 1,066,400 in the previous month.

The jobless rate in the country remained steady at 5.0%, close to the record low of 4.9% reported in June and July last year. The figure was lower than market expectations of 5.1%, which also raised prospects of another rate hike by the Bank of Canada.

On Wednesday, the country’s central bank held its benchmark rate at a 15-year high of 4.50% after announcing eight consecutive rate hikes.

The greenback remained under pressure following the release of US jobs data. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell 0.64% to 104.64 on Friday.

The rise in price of oil, one of Canada’s major exports, failed to provide support to the loonie. WTI crude oil prices gained 1.3% to settle at $76.68 per barrel on Friday.

The CAD/USD forex pair fell 0.01% to 1.3830 on Friday. For the week, the loonie lost around 1.7% against the greenback.

What are expectations: With no major economic reports due to be released today, traders will keep an eye on the US dollar and crude oil prices to provide some direction to the loonie. The release of Canada’s producer price index scheduled for the end of the week will also remain in focus.

Other Markets: European indices closed lower on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 1.67%, 1.31%, 1.30% and 1.35%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Turkey’s current account and retail sales, India’s inflation rate, Mexico’s industrial production, as well as Central Bank of Brazil’s focus marker readout.