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Gold dips as U.S. jobs data bolsters dollar

Gold dipped on Thursday, pressured by a slightly firmer dollar, on the back of the firsttranche of U.S. data due to provide further clues on whether interest rates will rise this month.
Private payrolls increased by 253,000, well ahead of expectations. Economists surveyed by Reuters expected the report to show that private payrolls grew by 185,000 in May, from 174,000 in April.
The ADP figures come ahead of the U.S. Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.
"We are getting important data today and tomorrow, and gold is very much dependent on how the dollar and yields will react to that data, so it's a bit of a waiting game," said Georgette Boele, commodities strategist at ABN AMRO in Amsterdam
Spot gold was down 0.25 percent at $1,264.92 per ounce. On Wednesday, it touched a session high of $1,273.74 an ounce, its strongest since April 25.
U.S. gold futures for August delivery fell 0.63 percent to $1,267.40 an ounce.
Also weighing on gold was the slightly firmer dollar index, which extended gains after the ADP data, already supported by higher U.S. Treasury yields and solidifying expectations of a rise in U.S. interest rates this month.
Positive payroll data from the United States could mean the Fed will raise rates as expected at its June 13-14 meeting.
Traders believe there is an 87 percent chance of a rate rise, according to CME Group's FedWatch tool.
"Market participants are cautious ahead of the Federal Open Market Committee meeting next month... There is a lot of uncertainty on what the Fed will do," said Hareesh V, head of research at Geofin Comtrade.
Gold, which has gained about 10 percent this year, has good support slightly below current levels, Boele said.
"Gold looks very well protected around the $1,250 area at the moment. You have the 200-day moving average supporting the price," she added.
Demand for American Eagle gold coins continued to be lackluster, data from the U.S. Mint showed, with sales for the first five months of the year tumbling 56 percent from the same period last year to 186,500 ounces.
Among other precious metals, silver fell 0.65 percent to $17.17 an ounce.
Platinum lost 1.12 percent at $932.90 an ounce. Palladium was last seen up 0.80 percent at $823.55.

Gold slides as private-sector hiring boost is seen lifting Fed rate-hike prospects

Markets/commodities reporter

News editor
Gold prices fell Thursday as a robust snapshot of private-sector hiring provided support for the dollar and backed expectations for a U.S. interest-rate hike later this month—souring investor appetite for the yellow metal a day ahead of the much-anticipated May jobs report.
The payrolls report due Friday is sidelining some investors but it’s largely expected to include strong enough numbers that would all but confirm the Federal Reserve’s willingness to raise interest rates in two weeks, as the central bank has signaled in member speeches.
August gold GCQ7, -0.68% fell $9, or 0.7%, to $1,266.60 an ounce. Prices posted a gain of roughly 0.6% last month.
Futures, however, traded off the session’s lows under $1,264 after the Institute for Supply Management said its manufacturing index edged up a 10th of a point to 54.9% and the IHS Markit U.S. manufacturing PMI showed a fall to an eight-month low of 52.7.
Gold’s fall toward session lows came “on the back of the stronger ADP payrolls data, as that pointed to robust jobs growth and thus a reason for the Fed to hike rates at its next meeting,” Fawad Razaqzada, technical analyst at Forex.com, told MarketWatch.
But the outlook for gold is uncertain, he said. “Gold has been supported up until now by soft U.S. dollar, but it requires a stock-market correction to push significantly higher from here.”
On Thursday, the ICE U.S. Dollar Index DXY, +0.15%  was up 0.2%. A weaker dollar often provides support for gold, while conversely, a stronger dollar tends to dent gold, which is most actively traded in the greenback. Meanwhile, U.S. equities headed higher after posting a gain in May.
Gold settled higher Wednesday, then pulled back in electronic trading as the Fed’s snapshot of economic activity around the country appeared to raise the prospects for June 14 interest-rate hike, expectations that could be further cemented by what’s expected to be a fairly solid May jobs report.
A poll of economists by MarketWatch conducted in advance of the ADP private-sector release, looks for a slight drop in May payrolls (which folds in government hiring as well) to 185,000 from the 211,000 reported a month earlier.
Data on Thursday showed private-sector employers added a seasonally adjusted 253,000 new jobs last month, payroll processor ADP said. Mark Zandi, chief economist for Moody’s Analytics, which helps produce the report, called job growth “rip-roaring.”
Traders are expecting a nearly 87% probability of a U.S. interest rate increase in June, CME Group’s FedWatch tool showed.
Higher interest rates tend to be dollar-supportive, cutting demand for dollar-priced gold for investors using other currencies. Higher rates also weigh on demand for gold, which doesn’t bear interest, in favor of yield-bearing investments.
Read: Mark Hulbert: Gold bulls can expect more bad luck
Metals market declines were even more prominent for silver. July futures SIN7, -1.24%  fell 26.1 cents, or 1.5%, to $17.15 an ounce. July copper HGN7, +0.25%  traded at $2.587 a pound, up less than a penny, or 0.3%.
July platinum PLN7, -1.59%  shed $15.40, or 1.6%, to $934.90 an ounce, while September palladium PAU7, +0.45%  added $4.05, or 0.5%, to $820 an ounce.
The SPDR Gold Trust GLD, -0.23%  slipped 0.2%, after trading less than 0.1% higher for May, while the iShares Silver Trust SLV, -0.61% fell 0.8% Thursday. The VanEck Vectors Gold Miners ETF GDX, +0.04%  fell less than 0.1%.

Gold Prices May Extend Gains on Soft ADP, ISM Data

DailyFX.com -
Talking Points:
  • Gold prices rise as US Dollar, Treasury bond yields decline
  • Soft ADP, ISM data may undermine Fed rate hike speculation
  • Crude oil prices may stall absent shock outcome on EIA data
  • Gold prices edged higher as the US Dollar declined alongside Treasury bond yields, boosting the appeal of non-interest-bearing and anti-fiat assets including the yellow metal. The move seems to reflect a cooling rate hike outlook. Fed funds futures now price in an 85.5 percent probability of a hike when the FOMC meets in mid-June, down from 90.6 percent at the start of the week.
    From here, the spotlight turns to the ADP estimate of US jobs growth and the ISM survey of manufacturing. The former is expected to reveal a 180k payrolls gain, marking a slight improvement from the prior month. The latter is predicted to show the pace of factory-sector activity growth slowed over the same period, marking the third consecutive month of deterioration.
    US economic data has mostly disappointed relative to consensus forecasts since mid-March, hinting that analysts' models may be overestimating the economy's vigor. That opens the door for still more downside surprises. Such results may amplify skepticism about the Fed's wherewithal to continue stimulus withdrawal, if not in June then in the months thereafter. Gold is likely to extend gains in such a scenario.
    Crude oil prices dipped to a two-week low intraday but a late-day recovery trimmed losses after API reported that US inventories shed 8.67 million barrels last week. That is well in excess of the 2.67 million barrel draw expected to be reported when official EIA figures cross the wires today. Earlier losses were attributed to news that Libya - except from the OPEC output cut deal - is pumping at the fastest pace since 2014.
    From here, only a sharp downside deviation the API print seems likely to imbue EIA inventory figures with significant market-moving potential. If the government's data points to a far smaller outflow than the market consensus or even a build, that ought to get traders' attention. Otherwise, a period of digestion may be in the cards until another eye-catching catalyst emerges.
    Retail traders expect gold to rise. Find out here what that hints about on-coming price moves!
    GOLD TECHNICAL ANALYSIS - Gold prices turned higher anew following a retest of resistance-turned-support in the 1256.74-63.87 area. From here, a daily close above the 38.2% Fibonacci expansion at 1280.35 targets the 50% level at 1300.73. Alternatively, a drop below 1256.74 paves the way for a retest of 1241.20.
    Gold Prices May Extend Gains on Soft ADP, ISM Data
    Chart created using TradingView
    CRUDE OIL TECHNICAL ANALYSIS - Crude oil prices dropped to retest the May 26 low at 48.16. A daily close below this barrier exposes the 46.47-47.12 area. Alternatively, a push above resistance marked by the 23.6% Fibonacci expansion at 50.09 targets the 38.2% level at 51.28.
    Gold Prices May Extend Gains on Soft ADP, ISM Data
    Chart created using TradingView
    --- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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    Contact and follow Ilya on Twitter: @IlyaSpivak
    original source
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