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Gold prices down amid big miss on U.S. ADP jobless data

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(Kitco News) - Gold prices are lower in early U.S. trading Wednesday, and extended modest overnight losses following the May U.S. ADP jobs report that was not nearly as bleak as expected. The safe-haven metal is also seeing limited buying interest at mid-week amid rallies in world equity markets. Still, price dips will very likely be seen as buying opportunities as traders and investors are still anxious. August gold futures were last down $9.80 an ounce at $1,724.60. July Comex silver prices were last down $0.06 at $18.20 an ounce.

The data point of the day in the U.S. is the ADP national employment report for May, which came in at a surprising loss of 2.7 million jobs when the report was expected to show job losses at just under 9 million. U.S. stock indexes were boosted a bit more from overnight gains as the metals sold off more.

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward higher openings and three-month highs when the New York day session begins. The awkward rallies in world stock indexes continue, amid a pandemic that has severely damaged major economies, the two largest economies in the world (U.S. and China) on the verge of another trade war or worse, and civil unrest in the U.S. and Hong Kong. Many market watchers believe the stock market rallies are being fueled by “cheap money” served up by major central banks, and at some point down the road there will be a reckoning.

It was a calmer night in America Tuesday, following recent nights of violence in major cities. Still, it could be a long, hot and restless summer in the U.S., reminiscent of the infamous summer of 1968.

In the U.S. and Europe there continues to be hope the pandemic has seen its peak for infections and businesses continue to reopen. The next couple weeks will be critical to see if more public interaction recently will spike infections—but so far that’s not the case. Meanwhile, scientists are working feverishly on a vaccine and on drugs that will diminish the illness.

In other overnight news, there was better economic news coming out of China, as its Caixin purchasing managers services index (PMI) came in at 55.0 in May from 44.4 in April and reaching the highest level in 10 years. A reading above 50.0 suggests growth in the sector. In the Euro zone the PMI rose to 30.5 in May from 12.0 in April. India’s was 12.6 from 5.4 and Japan’s was 26.5 from 21.5 in the same period. The U.S. services PMI is out later today and is seen at 44.0 in May from 41.8 in April.

The important outside markets see the U.S. dollar index lower early today and hitting an 11-week low overnight. Nymex crude oil prices are higher, at a three-month high, and trading around $36.65 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.  

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

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold bulls have the firm overall near-term technical advantage and are keeping alive a price uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at the April high of $1,789.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,668.40. First resistance is seen at the overnight high of $1,738.90 and then at $1,750.00. First support is seen at today’s low of $1,716.00 and then at $1,700.00. Wyckoff's Market Rating: 7.5

Live 24 hours silver chart [ Kitco Inc. ]

July silver futures bulls have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the February high of $19.075 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $17.00. First resistance is seen at $17.50 and then at this week’s high of $18.95. Next support is seen at $18.00 and then at $17.75. Wyckoff's Market Rating: 7.5.

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.