As the dollar rebounded after its initial negative reaction to the nonfarm payrolls report, buck-denominated gold turned negative on the week. But it remains to be seen whether there will be another last minute drama. Throughout much of this, this week, the precious metal has been trading inside a tight range, supported by a pause in the dollar rally after the FOMC offered no new information and the appointment of a dovish Fed President was already priced in. In a week where equity markets in Germany and US hit new highs, the metal’s earlier performance, if not eye-catching, had been respectable. That being said, I still remain cautious on gold until and unless it moves back above $1300 again. There is still the potential for a drop to the support trend of its bullish channel around the $1255 area before it decides on its next move.

But what gold does next will depend on to a larger degree on the dollar. As mentioned, the greenback managed to bounce back on Friday after its initial falls on the back of a slightly disappointing jobs report. The highly optimistic consensus expectation of over 300,000 jobs added didn’t materials. Instead, jobs grew by a still-good 261,000 last month. There was a net revision of 90,000 more jobs than previously reported for August and September. When taking into account the jobs data for the past three months, the trend of employment has remained solid. However, wage growth fell short of expectations in October and that was the biggest disappointment in the report. Average hourly earnings were flat against expectations for 0.2% growth, following a 0.5% increase the month before. The dollar’s recovery was later aided by the ISM Non-Manufacturing PMI, which came in better than expected at 60.1 versus 58.5. Additionally, factory orders rose 1.4% month-over-month, which was stronger than 1.3% expected.

Next week, the economic calendar is a lot lighter, so the dollar may remain in ranges. Apart from the impact of the dollar, gold could find direction from the stock markets. For example, it could come back in the event of an unexpected rise in risk aversion. Otherwise, I am struggling to think what could support the metal in the near-term outlook, as the global equity markets are still holding up rather well.