Gold is still often referred to as a haven investment – you stick it into the back pocket of your investment portfolio just in case the world turns rocky again. This hasn’t been the case in recent years, though, with gold rising and falling in tandem with stock markets on most days.

So if the economy isn’t influencing gold, what is? According to Edel Tully, a strategist at UBS, the most important factor influencing gold right now is the Federal Reserve’s view on economic stimulus – specifically, quantitative easing. QE, as it’s known, is the act of printing money to buy long-term U.S. Treasury bonds, which is supposed to hold down bond rates and make borrowing money less expensive for businesses and consumers. Voilà, the economy is stimulated.

Gold investors love the idea of the Fed running its own printing press, because gold tends to respond to the fear that paper money is losing its value and stoking the threat of inflation down the road. When Fed chairman Ben Bernanke failed to bring up the possibility of another round of quantitative easing in his Congressional testimony last week, gold promptly fell 4.9 per cent, or $87 (U.S.) an ounce.

Then, when the Wall Street Journal reported on Wednesday that the Fed was considering a different approach to its bond-buying campaign, gold rose.

“The possibility of more QE from the Fed, while not the only factor currently influencing gold, is right now the most important determinant of the metal’s next move,” Ms. Tully said in a note.

And whether the Fed resorts to QE hinges to a large extent on jobs: Strong job gains suggest no economic stimulus is needed, while weak gains could give the Fed all the incentive it needs to give the economy a boost. This makes Friday’s non-farm payrolls report from the U.S. Labor Department essential in directing gold’s next move.

“We believe a stronger-than-expected February jobs number would deal another blow to gold’s appeal for those participants who are purely focused on QE. But given that gold has already given back all gains made after the Jan. 25 FOMC meeting, that makes its next move all the more interesting,” Ms. Tully said.

“With so much (over)emphasis on QE expectations right now, we think gold’s response on Friday will act as a good barometer of the metal’s wider appeal.”