Zong Xiaoli: Non-farm payrolls are coming, what should we pay attention to?

The current market situation is very complex. After the US dollar index experienced a sharp decline on Monday, it has now entered a phase of oscillating downward with no significant movement for the time being. Gold, after a large surge last Friday, has been trading sideways for two consecutive days since the start of this week, showing almost no clear direction. This behavior feels very strange—like a fierce beast suddenly turning into a gentle kitten, creating a strong sense of dissonance. Many are wondering what kind of show this market is putting on. Why are we seeing widespread contraction? Is it that no one intends to give a clear direction anymore?

Actually, the reason for the current contraction in the market is fundamentally because it has reached a very critical point, and it needs new stimuli to provide direction…

Take the US dollar as an example. The sharp decline on Monday combined with the oscillating downward movements yesterday and today may seem like a downward trend overall, but in reality, that’s not the case. The purpose of this decline is mainly to test the support level twice—deliberately pushing the price down to probe the lower support. Once the support is confirmed, the dollar index can officially start an upward trend. Therefore, the slow pace of the dollar index’s decline is intentional; it’s essentially a process of testing the bottom. There’s no need to continue suppressing the price strongly. As long as an effective support level is found, the price can officially shift direction, and this will be the key focus moving forward.

As for the gold market, the current situation is exactly the opposite. Gold is in the process of testing a double top, deliberately pushing the price higher to probe the resistance above. If the resistance is confirmed, gold can then legitimately turn downward. The reason it hasn’t started yet is that the key stimuli have not yet arrived. Therefore, gold is temporarily in a consolidation phase, patiently waiting for the triggering factors to come into play.

So, what exactly are these triggering factors? When will they arrive? I believe tonight might be the opportunity!

Because tonight, the US will release the January non-farm employment data and unemployment rate. These two figures are always the most closely watched indicators in the market, known as the barometer of the US economy. Every time these data are released, they tend to cause significant market volatility, making them highly effective stimuli. Once the US Department of Labor adjusts the non-farm data to be released tonight, it’s destined that these figures won’t be simple—they are likely to become major market catalysts. This means opportunities for both the dollar and gold. Big changes could happen tonight…

Therefore, tonight’s non-farm data release is not to be taken lightly. We must be especially alert for unexpected developments, particularly regarding the dollar and gold. Once confirmed, the market could shift—possibly with the dollar suddenly turning upward and gold starting to decline. If these scenarios occur, just follow the trend and avoid going against the market. After all, no one can oppose the market; riding the trend is always the best strategy!