Will gold hit a new record high after NFP?

In recent days, gold has seen a remarkable surge, reaching an all-time high of $2070, fueled by growing speculation surrounding the Federal Reserve's potential monetary easing in 2024. This surge coincides with mounting signs of a cooling U.S. labor market, which has captured the attention of traders and investors alike.

Traders are currently factoring in a 60% probability of a rate cut by March of the following year, as indicated by CME's FedWatch Tool. This expectation is rooted in the belief that reduced interest rates could make zero-yield gold more appealing compared to alternative assets like bonds and the dollar.

This week's Labor Department report added weight to the notion of a shifting labor market, revealing a decline in job openings to 8.73 million in October— the lowest level since March 2021. As these indicators set the stage, all eyes now turn to the upcoming U.S. non-farm payrolls (NFP) data, scheduled for release on December 8. This data holds the potential to be the decisive factor shaping the future trajectory of both gold and silver prices.

Traders are now gearing up for the NFP report, anticipating it to confirm the softening of the U.S. employment market. The consensus forecast of +185K jobs added falls below the one-year average, setting the stage for a potential shortfall in job additions. This outcome could further amplify dovish expectations for the Federal Reserve in 2024, potentially paving the way for gold to hit new record highs in the aftermath of the NFP release.