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  • Writer's pictureSieracki Milosz

The Impact of August Nonfarm Payrolls (NFP) Report on Dollar and Gold Prices

Gold Bars on Dollars money

The August nonfarm payrolls (NFP) report is set to be a pivotal moment for the financial markets, as it holds the potential to shape the future trajectory of the US dollar and gold prices. This report is anticipated to unveil crucial insights into job growth, with predictions suggesting an addition of approximately 170,000 new jobs—a figure that follows a previous rise of 187,000 jobs in July.

The Significance of NFP Reports

NFP reports carry immense weight in the world of finance as they provide a snapshot of the US labor market's health. These reports are known to influence market sentiments and even impact the decisions made by the Federal Reserve regarding monetary policies.

Forecasted Job Growth

The focus is currently fixated on the forthcoming NFP report for August, with experts estimating the addition of around 170,000 new jobs. While this figure falls just short of the 187,000 new jobs recorded in July, it is indicative of steady growth in the job market.

Market Responses to NFP

Market reactions to the NFP report can be quite significant, especially when the reported numbers diverge from expectations.

Potential Impact on the US Dollar

Should the NFP report indicate a job growth figure of less than 150,000, there is the possibility of traders reassessing their perceptions of the Federal Reserve's monetary policy outlook. A weaker-than-expected job growth could lead to concerns about economic momentum, potentially weakening the US dollar.

Implications for Gold Prices

Conversely, a subdued NFP report might serve as a boost for gold prices. Investors often turn to gold as a safe-haven asset during uncertain economic times. If the report hints at a slowdown in job creation, it might signal economic uncertainty, prompting an increase in demand for gold.

NFP Report and Recent Job Data

The days leading up to the release of the NFP report have witnessed some less-than-ideal job-related data, such as the Job Openings and Labor Turnover Survey (JOLTS) and the Automatic Data Processing (ADP) reports. These data points have led to heightened expectations that the NFP report could potentially reveal a lower number of jobs than anticipated.

ADP Report Highlights

In a recent example, the ADP report for private payrolls in August fell short of experts' predictions. Instead of the projected 195,000 jobs, the report indicated a total of 177,000 jobs. This divergence from expectations underscores the uncertainty surrounding job growth.

Potential Scenarios and Their Implications

The outcomes of the NFP report could trigger distinct scenarios, each with its own set of implications.

Scenario 1: Strong Job Growth

If the NFP report reveals the addition of more than 200,000 new jobs, it might heighten the risk of inflation. This could potentially strengthen the US dollar while simultaneously putting pressure on gold prices.

Scenario 2: Weaker Job Growth

On the other hand, if the NFP report showcases fewer than 150,000 new jobs, traders could reconsider their outlook on the Federal Reserve's monetary policies. This shift in perspective might weaken the US dollar, potentially serving as a positive factor for gold prices.

Gold's Recent Trajectory

Notably, gold prices have recently reached a peak just below $1950. In the event that the NFP report supports a weaker job growth narrative, this level could become the immediate upside target. Furthermore, the previous month's peaks at $1954, $1963, and $1972 could come into play as subsequent resistance levels.

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As the financial markets eagerly await the August NFP report, the potential implications for the US dollar and gold prices remain paramount. The job growth figures revealed in the report could lead to a shift in market sentiments, influencing investor decisions and shaping the Federal Reserve's approach to monetary policy in the coming months.


Q1: What is the August nonfarm payrolls (NFP) report?

A1: The August NFP report is a crucial economic indicator that reveals the number of new jobs added to the US labor market during the month of August.

Q2: How do NFP reports impact financial markets?

A2: NFP reports can significantly influence market sentiments and impact decisions related to monetary policies, particularly those made by the Federal Reserve.

Q3: What happens if the NFP report indicates weak job growth?

A3: If the NFP report suggests a lower-than-expected job growth figure, it could lead to concerns about the economic outlook, potentially weakening the US dollar and boosting gold prices.

Q4: What are the potential scenarios based on the NFP report?

A4: The NFP report could result in two scenarios: stronger job growth, which might risk inflation and impact the US dollar and gold prices, or weaker job growth, which could affect the US dollar and gold prices differently.

Q5: How have recent job-related data influenced expectations?

A5: Recent data such as the JOLTS and ADP reports have heightened expectations that the NFP report might reveal a different job growth figure than initially anticipated, adding an element of uncertainty to the market.

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