Last month, nonfarm payroll data exceeded expectations, defying predictions that high interest rates would slow the US economy. Instead of cooling down, the latest figures showed unexpected strength, triggering a significant unwinding of bearish USD positioning, with the EUR/USD dropping 209 pips since then.

Moreover, this week's ADP report indicated that the US added 233K jobs, well above the anticipated 110K, while third-quarter US GDP grew at a solid 2.8%. Pending home sales surged by 7.4% in September, marking the most vital reading since June 2020. Additionally, jobless claims dropped to 216K, the lowest level since May 2024. In short, the consumer is performing well.

What does this mean for Friday's NFP release at 12:30 UK time? The latest estimate suggests that the US created 108K new jobs. However, the extremely strong ADP figures and research by Scotia Bank indicate less than a 10% probability that the NFP will fall below 100K this Friday. Therefore, we could likely see a robust performance, further strengthening the dollar and driving down gold prices. This starkly contrasts with some banks predicting near-zero growth for NFPs following Storm Helen and Hurricane Milton. Expectations are also rising for fewer rate cuts in 2025. Currently, US interest rates are projected to be between 3.50% and 4% by November 2025, up from 3.25% to 3.75% just last week and 2.75% to 3.25% a month ago. The next rate meeting is scheduled for seven days' time.

For markets like gold, much is at stake, and a strong NFP could trigger a sharp sell-off. For about 95 days, between April and July, XAUUSD traded sideways. The price finally broke its stagnation, rising 21% from the low of 2294. Since then, the price has seen a 5% correction, followed by declines of 4.76% and 3%, with smaller movements not worth noting. If the NFP figures are very strong on Friday, the expectation that the Fed will cut rates swiftly may diminish, potentially leading gold to slide 6% and test October's low of 2604. Such a bearish move wouldn't necessarily end the uptrend, but it would sting. Moreover, as US data continues to improve, coupled with Trump's win and his promise to further boost GDP, we might see the beginning of the end of gold's stellar trend that has dominated since November 2022.