Gold
Market Drivers
The 10-year US Treasury yield closed lower on the day after climbing to 5.342%. However, the US Dollar continued to strengthen, leaving gold caught between opposing forces and trading within a relatively narrow range between $4,139 and $4,192.
The ISM Manufacturing PMI came in at 54.5, below expectations of 55.0, while weekly jobless claims stood at 197,000 versus expectations of 200,000.
However, the ISM Prices Paid component jumped to 77.9, well above the 72.3 forecast and reaching its highest level since May. The figure reflected the market's reaction following the data release. The 30-year Treasury yield also continued to rise, reaching a new high of 5.69%.
Overall, manufacturing activity remained relatively stable.
Geopolitical Developments
There were no major new developments on the geopolitical front, although several updates provided mixed signals.
A Wall Street Journal report said that Trump had told his advisers about the possibility of continuing military action after the midterm elections. While this is not a new position, the repeated comments remain relevant for markets.
Meanwhile, other reports indicated that Iran had offered nuclear inspections in exchange for sanctions relief.
Additional reports pointed to increased oil exports through the Strait of Hormuz and Saudi Arabia's east-west pipeline routes. However, these developments failed to significantly ease oil prices.
More recently, reports emerged that a tanker had been attacked near Oman. This development warrants attention over the weekend because it could increase the risk of further attacks or trigger additional pressure from the US in response to the incident.
Nonfarm Payrolls in Focus
The market is now expected to prioritize economic data, with the September Nonfarm Payrolls (NFP) report representing the week's key release at 19:30 WIB.
NFP is expected to fall from 162,000 to around 89,000, while the unemployment rate is forecast to remain at 4.1% and Average Hourly Earnings are expected to rise 0.3% month-over-month.
As usual, a weaker-than-expected employment report would likely support gold, while stronger-than-expected data could put additional pressure on the precious metal.
However, several potential scenarios should be mapped out ahead of the release.
Base Scenario
The base scenario assumes NFP comes in around 80,000-89,000 or 90,000-95,000.
These figures would represent a moderate result and broadly align with the baseline scenario. A reading below the previous month's figure would generally support gold.
Gold could still experience some initial volatility following the release, but the overall bias would favor a gradual recovery as long as the employment data does not significantly exceed expectations.
Bearish Scenario
The bearish scenario assumes NFP comes in between 100,000 and 125,000.
Although this would still be below the previous month's 167,000 figure, the stronger-than-expected result could weigh on gold. In this scenario, $4,100 would become an important support level, followed by the $4,040 area.
The most extreme downside reaction could occur if NFP unexpectedly jumps above 135,000 or 150,000.
Such a result could increase expectations for a more hawkish Federal Reserve and potentially push gold toward the $4,000-$4,020 area, with a further downside risk toward $3,965.
Bullish Scenario
The bullish scenario assumes NFP comes in below 75,000.
A significantly weaker employment report could trigger a rebound in gold, potentially allowing the price to break back above $4,200 and target the $4,230 area.
The strongest bullish reaction could occur if NFP unexpectedly falls below 50,000.
In that case, gold could gain enough momentum to challenge resistance around $4,250, with the potential to extend toward the $4,300 area.
Gold Technical Analysis
The daily candlestick closed as a spinning top, characterized by relatively similar upper and lower shadows and a small real body. This pattern reflects a balanced market and signals uncertainty between buyers and sellers.
The formation suggests that traders remain in a wait-and-see mode ahead of the week's most important economic release, the Nonfarm Payrolls report at 19:30 WIB.
A weaker-than-expected employment report would generally support gold, while stronger data could reinforce selling pressure.
From a technical perspective, $4,223 resistance and $4,110 support are the two key levels to watch.
A break above $4,223 could make it easier for gold to extend its recovery, with $4,255 and $4,310 representing the next resistance levels.
Conversely, a break below $4,110 could expose gold to further downside toward $4,045 and $4,000, with the more distant downside target around $3,965.
With the NFP report likely to trigger significant volatility, the market could see sharp moves in either direction depending on how the actual employment figures compare with expectations.