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Gold gets hammered at $1,830 again

Kitco News

(Kitco News) - Gold traders have to be nimble in the current market environment. The precious metal is sensitive to positive economic data and comments from the Federal Reserve that highlight potential cutbacks in its monthly asset-purchases, according to some analysts.

The gold market is once again struggling to find some traction after it was unable to hold on to its overnight gains. The precious metal found some support early in Wednesday 's session after payrolls processing company ADP said that only 330,000 jobs were created in July. Economists were expecting to see job gains of 695,000.

However, the 200-day moving average once again capped rallies, and gold was hit with some selling pressure following better than expected data from the Institute of Supply Management (ISM). It said that its non-manufacturing Purchasing Managers Index it a record-high reading of 64.1% last month, up from June 's 60.1%. The data was better than expected.

The gold market was dealt another blow after Federal Reserve vice-chair Richard Clarida said he supported raising interest rates in 2023. "Necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022," Clarida said in a webcast discussion hosted by the Peterson Institute for International Economics.

December gold futures last traded at $1,814.10 an ounce, unchanged on the day. Early in Wednesday 's session, the precious metal was up 1% on the day.

Live 24 hours gold chart [Kitco Inc.]

"Gold is stuck in a range and is going to be sensitive to these types of remarks," said Phillip Streible, chief market strategist at Blue Line Futures.

However, although gold appears to be capped at its 200-day and 50-day moving averages, Streible said that he remains bullish on gold and that dips should be bought.

"I don 't think you can ignoring the rising stagflation risks," he said. "We are seeing rising inflation and mixed economic data a best," he said. "The labor market continues to disappoint."

With gold unable to hold gains above its 200-day moving average, some analysts have said there is a risk for further weakness and wouldn 't rule out a drop to $1,790 an ounce.

Analysts at Commerzbank said that they are neutral on gold in the near term but remain bullish in the long term. They added that gold 's inability to hold its gains is worrying.

The ADP data highlights some downside risk to Friday 's official nonfarm payrolls report; however, many economists have noted that the private sector report is not a consistent predictor of the government numbers.

Many investors are hesitant to take a position in gold ahead of Friday. Some central bank officials have said that strong labor market data in July and August could prompt the central bank to reduce its monthly bond-purchase program by the end of the year.

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.