Analysts: Nonfarm payrolls would have to fall below 100K to boost gold

Tomorrow's U.S. employment report will need to show a significantly weaker growth in July in order to boost the gold prices, market analysts say.

However, despite the recent downbeat ADP report, economists are quite positive about Friday's data, expecting the nonfarm payrolls report to show 223,000 jobs were created in July. It is expected to be the third consecutive month of strong job growth. So far this year only one month, March, has seen a print below 200,000.

Economists note that another print above the 200,000 threshold will keep the Federal Reserve on pace to raise interest rates in September - a scenario that keeps supporting the U.S. dollar and weigh on commodities.

Even disappointing data released ahead of the official jobs report wasn't enough to lower the level of optimism. Wednesday, payrolls processor ADP said its private payrolls data showed that 185,000 jobs were created last month, well below expectations of 216,000.

"I think 150,000 [jobs] would raise some eyebrows but [job growth] would have to be under 100,000 to shock the markets," said Sean Lusk, director of commercial hedging at Walsh Trading.

George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, said he doesn't know what magic number will be needed to shift expectations.

"This gold market is only reacting negatively to the news, which I think is long-term bearish but in the short-term it means we could see lower prices," he noted.

Colin Cieszynski, senior market analyst at CMC Markets, suggested gold won't hold gains above $1,100 an ounce, another push lower is most likely and that catalyst could come tomorrow.

"I have been expecting to see a rally and then another push to new lows but instead I think we are going to see consolidation and then the push to new lows," he said.