Labour data is viewed through an inflationary/deflationary lens right now. Although the Fed wants to ensure ‘maximum employment’, right now a labour market miss will be welcomed by the Fed as an inflationary fight win. The basic relationship between employment and inflation is explained via Phillip’s curve below.

When employment is ‘tight’ (good) then workers can demand higher wages and that can fuel inflation. When employment is ‘loose’ (bad) then employers have more labour choices and that can result in lower wages which is deflationary.

The impact on gold

The reason gold is so pushed and pulled around by the narrative is due to the impact of the USD, yields, and inflation on the rate for gold. If you push and pull on any one of those inputs then gold’s price is influenced too. Check out this piece on the four things to know about trading gold.
So, for the labour data on Friday, this is what can be expected.

If the headline print comes in below 110K (minimum expectations) and the hourly earnings below 4.2% with the unemployment rate above 3.8% then gold and silver could potentially surge higher. Why? Because that loosening of the labour market will signal to the Fed that it may not need to hike rates twice and the impact of the previous rate hikes is working. This could result in US yields falling and the USD falling which is a natural boost for gold and silver.

Gold technicals

Support for gold sits at $1900 and the descending trend line marked would be an obvious place for buyers to step if we saw a break higher on weak jobs data.