How the US jobs report moves gold
Why the first Friday of the month is often the biggest day for gold.
Once a month the US government reports how many jobs the country added. Traders call it NFP, short for non-farm payrolls. It comes out at 8:30am New York time, usually on the first Friday of the month, and gold can move sharply within seconds.
Why jobs matter to a metal
The link is interest rates. The Federal Reserve sets US rates partly by looking at how strong the jobs market is. Plenty of jobs means the economy can cope with higher rates. Few jobs means the Fed may need to lower them.
Gold pays no interest. When rates rise, money in savings and bonds earns more, and gold looks less attractive. When rates fall, the opposite happens.
The textbook reading
- More jobs than expected: usually bad for gold.
- Fewer jobs than expected: usually good for gold.
- Faster wage growth: usually bad for gold, because it can feed inflation.
What catches people out
The number on its own means little. What counts is the gap between the result and the forecast. A strong number that everyone expected can leave gold unmoved. Last month's figure also gets revised, and a big revision can outweigh the headline.