Gold Price Rises Significantly although US NFP is Good

Supply, demand, interest rates, and investor behavior are key drivers of gold prices. Gold is often, but mistakenly, used to hedge inflation under the belief that gold will appreciate and offset inflationary pressures. Gold is subject to investor sentiment about risk. The spot gold prices jumped by 1.5% to $1859.05. That was as gold futures for April delivery rose by 1.6% to $1863.60. As of this news writing on Friday (10/March) evening, the XAU/USD chart shows a rise in the price of gold by 1.62% to $1859.10.

United States Non Farm Payroll (NFP) rose by 311k in February 2023, higher than estimates of 205k. However, the Average Hourly Income and American Unemployment Rate are a bit lackluster.

The Income fell from 0.3% to 0.2%, while the Unemployment Rate rose from 3.4% to 3.6%. It was highlighted by Jim Wyckoff, a senior analyst at Kitco Metals.

Jim also said that As is well known, the wage component of the American jobs report is lower than expectations. That's more highlighted even though the US NFP is higher than expected.

Fed Expected to Slow Rate Hike, Gold Sells Well

Apart from the United States Employment report, the market is currently also paying attention to the Silicon Valley Bank (SVB) crisis. SVB's plan to sell USD2.25 billion worth of shares to increase the bank's funding reportedly failed.

The Banking sector stocks also plummeted and dragged down the yield on US Treasury bonds along with the American dollar. In his opinion, the focal point is yield.

With yield plummeting today, the gold market is pushed up. It was commented by David Meger, a director of High Ridge Futures. One of the sources said that the cause of the SVB failure was a really high interest rate.

As a result, the United States central bank is now expected to think twice before aggressively boosting interest rates; just as Powell stated in yesterday's testimony.

Kuroda Said Goodbye, USD/JPY is in Its High Level

Gold is the asset that benefits the most in this kind of situation. There was a sharper risk aversion action in the market to end the trading week.

This is likely to drive some safe haven demand for gold and silver. That opinion was shared by Jim Wyckoff, a senior analyst at Kitco Metals. Elsewhere, USD/JPY is in its high level position.

USD/JPY cemented positions in the 136.60s range in Friday's Asian session. It was still within the highest range since December 2022. The policy meeting of the Central Bank of Japan (BoJ) this morning did not provide any new clues that excited the market.

That is why; the yen's weakening trend continued against various other major currencies. BoJ Governor Haruhiko Kuroda did not change any policy in his last policy meeting before retiring on April 8, 2023.

Kazuo Ueda Prefers the Ultra-Loose Policy

In line with expectations, Japan's interest rate remained -0.10%. Meanwhile, the JGB 10Y target yield remained 25 basis points around zero.

Kuroda's future successor, Kazuo Ueda, has insisted the central bank needs to maintain an ultra-loose monetary policy. That is until there is clear evidence that inflation is able to sustainably exceed its 2% target.

Japan‘s newly nominated central bank governor, Ueda Kazuo, faces a baptism of fire when he takes the reins of the world’s third-largest economy in April. With the market already signaling an end to Abenomics ultra-easy monetary policy, any missteps by the surprise appointee could spark a harsh financial reaction.

The analysts agreed Ueda would not suddenly change policy in its first meeting on April 27-28. Overall, the BOJ under Ueda will continue to do monetary easing.

It is especially while paying attention to market functionality and they will not make any major changes soon. It was said by Nobuyasu Atago, a chief economist at Ichiyoshi Securities.

Most Observers Hope a Change in BOJ policy

Regardless, a Bloomberg survey following Ueda's testimony last month showed that two-thirds of observers still expect a change in BoJ policy. That is especially by the middle of this year.

For about 41% of respondents cited June as the most appropriate time for the moment. Given the ongoing projections, USD/JPY will be more influenced by speculation around the Fed's interest rate.

The near-term US economic data will have its effect as well. Key market focuses include the Non-farm Payroll report later in the evening as well as U.S. inflation next week.