• Gold rallies as the US dollar and yields sell off after the NFP miss in the details. 
• The headline was a touch above expectations but the UR and earnings disappointed. 
• Fed funds futures traders are still pricing in a September rate hike of 75 basis points after the jobs report.

The gold price is higher on the Nonfarm Payrolls on the knee-jerk. The US dollar has sold-off and US yields are volatile while US stocks rally. The outcome of the data was mixed but the Unemployment came in at 3.7% vs. 3.5% expected and Average Hourly Earnings missed the mark as well, at 0.3% month on month vs. 0.4% expected. This data, behind the headline beat of 315k vs. 300k expected, is less inflationary and therefore the market initially dialled down its expectations of a 75 basis point hike from the Federal Reserve at the next meeting later this month. In this regard, however, it is worth noting that the Participation Rate was higher, potentially explaining the higher Unemployment Rate. 

Payrolls have continued to advance strongly in August,  but at a more moderate pace following the eye-popping 528k increase registered in July, which was a five-month high. Wage growth has slowed modestly after registering an unexpected 0.5% jump last month, nevertheless, Fed swap pricing of the terminal cycle rate has dropped to around 3.91%. The 2-year Treasury yield has fallen on the data within a 3.518%-3.449% range but is down 1.28% on the day so far. However, fed funds futures traders are still pricing in a September rate hike of 75 basis points after the jobs report which may limit the fall in yields, the greenback and put a cap on the yellow metal. 

Prior to the data, the US dollar was headed for its third weekly gain in a row and was near two-decade highs against other major currencies, as measured by the DXY which tracks the currency against six counterparts. The US currency has been on the front foot since Federal Reserve Chair Jerome Powell said at the Jackson Hole symposium in Wyoming a week ago that rates would need to be high "for some time" to combat inflation. The index rallied to a fresh 20-year high on Thursday of 109.99, bolstered by robust U.S. data showing a fall in unemployment claims. Despite the data, DXY is still on track for a 0.5% weekly gain on a closing basis. 

After all, Fedspeak has successfully catalyzed a repricing in rates markets, which have now largely priced-out odds that rate cuts will immediately follow the rate hiking cycle, as analysts at TD Securities noted.

''This leaves current pricing for rates near-fair, which suggests that the catalyst for the move lower in precious metals pricing is now fundamentally running out of steam. Notwithstanding, with every tick lower in gold prices, we continue to see odds of a major capitulation event growing, which could coincide with a break below a multi-decade uptrend in the yellow metal near $1675/oz.''

Gold technical analysis

Meanwhile, however, there is a bullish argument on the charts for the yellow metal.

The price is correcting from a strong sell-off on the daily timeframe. The bulls are moving in on a 38.2% Fibonacci retracement and a bullish close today, Friday, could leave prospects for a deeper correction over the start of next week, taking the price into the resistance as illustrated on the above chart.