The US Nonfarm Payrolls (NFP) for March are predicted to rise by 240,000. Gold prices often show a stronger reaction to a disappointing jobs report compared to a positive one. In this article, we examine the historical impact of US jobs reports on gold valuations by analyzing the XAUUSD pair's response to the previous 32 NFP releases.

As the US Bureau of Labor Statistics (BLS) prepares to release the March jobs report on Friday, April 7, expectations are set for a 240,000 increase in Nonfarm Payrolls, following the better-than-expected 311,000 increase in February.

To understand gold price reactions to NFP data, we plotted the price response at 15-minute, one-hour, and four-hour intervals after the release, comparing it to the deviation between the actual NFP result and the expected result. We used the FXStreet Economic Calendar for deviation data, which assigns a point to each macroeconomic data release to show the divergence between the actual print and the market consensus.

Our analysis revealed that there were 12 negative and 20 positive NFP surprises in the previous 32 releases, excluding data for March 2021. The average deviation was -0.86 on disappointing prints and 1.35 on strong figures. Gold moved up by $3.97 on average 15 minutes after the release if the NFP reading fell short of market consensus, while it declined by $3.09 on average on positive surprises.

The correlation coefficients calculated for the different time frames mentioned above are not close enough to -1 to be considered significant. The strongest negative correlations are seen 15 minutes and one-hour after the releases, with the r standing at -0.56 and -0.55, respectively. Four hours after the release, r edges higher to -0.43.

Several factors could be weakening gold’s inverse correlation with NFP surprises. A few hours after the NFP release on Friday, investors might look to book their profits toward the London fix, causing gold to reverse its direction after the initial reaction. Additionally, underlying details of the jobs report, such as wage inflation measured by Average Hourly Earnings and the Labor Force Participation rate, could impact market reactions. The US Federal Reserve (Fed) maintains a data-dependent approach, and the headline NFP print combined with these other data could drive market pricing of the Fed's next policy action.

It is also important to note that the March jobs report will be published on Good Friday, and low trading volumes could result in a muted market reaction.