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Gold Prices Slightly Weaker Following Strong ADP Jobs Report

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(Kitco News) - Gold prices are modestly down in early U.S. trading Wednesday, following a strong U.S. economic report that lifted the U.S. stock indexes. Also, there is less risk aversion in the marketplace at mid-week. December gold futures were last down $1.80 an ounce at $1,205.40. December Comex silver was last up $0.042 at $14.735 an ounce.

The just-released U.S. ADP national employment report for September showed a gain of 230,000. Forecasters were expected a rise of 185,000 jobs. Gold prices down-ticked modestly following the report, while U.S. stock indexes up-ticked. This report comes ahead of the more important Labor Department Employment Situation Report for September on Friday morning. The non-farm payrolls number is expected to come in up 180,000.

World stock markets were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Chinese markets are closed until Friday for a public holiday.

Worldwide attention, especially in Europe, is on the new anti-establishment Italian government’s plans to deal with Italy’s financial and economic problems. Reports overnight said Italy is backing down from its hardline stance with the European Union over the matter. The Euro currency today stabilized on the news, after being under selling pressure earlier this week.

In other overnight news, U.S. Federal Reserve Bank of Chicago President Charles Evans said in a speech in London the U.S. economy is humming right along and that the Fed will likely have to put the brakes on the economic growth by continuing to gradually raise interest rates. He added such Fed policy moves are historically normal during stronger economic expansion periods.

U.S. retail giant Amazon has significantly raised its minimum wage for its workers to $15 an hour. While this move seems benign right now, it’s just one more small clue of rising price inflation that could very well become problematic at some point—and just maybe sooner than even economists expect. Fed Chairman Jerome Powell reiterated on Tuesday that price inflation is not a problem. Problematic inflation is generally bullish for hard assets like raw commodities and bearish for paper assets like stocks and bonds.

The key outside markets today find the U.S. dollar index slightly higher after hitting a 2.5-month high on Tuesday. Meantime, November Nymex crude oil prices are also near steady after hitting a four-year high Tuesday. Prices are trading just above $75.00 a barrel.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the U.S. services PMI, the global services PMI, the ISM non-manufacturing report on business and the weekly DOE liquid energy stocks report.

Live 24 hours gold chart [Kitco Inc.]

Technically, gold bears have the overall near-term technical advantage. However, prices are back in the middle of a trading range, which again suggests the metal has put in a market bottom. Gold bulls' next upside near-term price breakout objective is to produce a close in December futures above solid resistance at $1,220.70. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the August low of $1,167.10. First resistance is seen at this week’s high of $1,212.30 and then at $1,218.00. First support is seen at $1,200.00 and then at this week’s low of $1,188.10. Wyckoff's Market Rating: 3.0

Live 24 hours silver chart [ Kitco Inc. ]

December silver futures bears have the overall near-term technical advantage, but recent price action suggests a market bottom is in place. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $15.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the September low of $13.965. First resistance is seen at this week’s high of $14.95 and then at $15.00. Next support is seen at $14.50 and then at this week’s low of $14.395. Wyckoff's Market Rating: 3.5.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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