Gold Prices Weaker In Wake Of Strong U.S. ADP Jobs Data

(Kitco News) – Gold and silver prices are modestly down in early-morning U.S. trading Wednesday, in the immediate aftermath of a much-stronger-than-expected reading on the U.S. economy. However, both metals had been under mild pressure in overnight dealings. June gold futures were last down $3.00 an ounce at $1,282.60. July Comex silver was last down $0.114 at $14.87 an ounce.

The just-released ADP national employment report for April showed a rise of 275,000 jobs, which is way above the forecast for a rise of 177,000. This report is a precursor to the more important employment situation report from the Labor Department on Friday morning, and suggests Friday’s jobs report could be stronger than many had expected. A strong employment report on Friday could alter the thinking of the Federal Reserve, regarding its present monetary policy than leans dovish.

Trader and investor focus will quickly turn to this afternoon’s U.S. economic data highlight of the week: the conclusion of the Federal Open Market Committee (FOMC) meeting that began Tuesday morning. The FOMC statement and a press conference from Fed Chairman Jerome Powell this afternoon are expected to see no changes in U.S. monetary policy. However, as usual, the statement and Powell’s comments will be parsed by the marketplace for clues on the timing of future monetary policy changes, and on inflation prospects.

Those Asian and European stock markets that were open overnight were mixed in very quiet trading. Most overseas markets in European and Asia were closed for the May Day holiday today. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

The key “outside markets” today see the U.S. dollar index down again on more profit taking after hitting a two-year high last week. Meantime, Nymex crude oil prices are lower and trading around $63.50 a barrel.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the U.S. manufacturing purchasing managers index (PMI), construction spending, the ISM manufacturing report on business, and the weekly DOE liquid energy stocks report.

Technically, the gold bears still have the overall near-term technical advantage. A nine-week-old downtrend line is in still place on the daily bar chart. However, last Friday’s bullish weekly high close is one clue that a market bottom is now in place. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $1,300.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,250.00. First resistance is seen at last week’s high of $1,290.90 and then at $1,300.00. First support is seen at the overnight low of $1,279.20 and then at $1,275.00. Wyckoff’s Market Rating: 4.0

July silver futures bears have the overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the April high of $15.40 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.50. First resistance is seen at this week’s high of $15.115 and then at $15.25. Next support is seen at this week’s low of $14.835 and then at last week’s low of $14.775. Wyckoff’s Market Rating: 4.0.

By Jim Wyckoff
For Kitco News


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