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Gold sees price gains after slightly weaker U.S. data

Kitco News

(Kitco News) - Gold and silver prices are firmer in early U.S. trading Wednesday, with gold notching a three-week high, in the immediate aftermath of a batch of U.S. economic data than came in a bit weaker than market expectations. December gold was last up $8.10 at $1,973.20 and December silver was up $0.081 at $24.59.

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The just-released ADP National Employment Report for August showed a rise of 177,000 jobs, compared to expectations for a gain of 200,000 and compares with a revised rise of 371,000 in the July report. Meantime, the second estimate of second-quarter U.S. GDP showed a gain of 2.1%, year-on-year, versus the first estimate of up 2.4% and was below market expectations. The closely watched PCE price index for the second quarter was up 2.5% versus the first estimate of up 2.6%. All of these numbers fall into the camp of the U.S. monetary policy doves, who want the Federal Reserve to hold off on raising interest rates further.

The busy U.S. data week is highlighted by Friday’s employment situation report for August from the Labor Department. The key non-farm payrolls number is expected to come in at up 170,000, compared to a rise of 187,000 in the July report.

Asian and European stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed to steady to slightly higher openings when the New York day session begins. Sentiment overseas has improved this week as China continues to implement measures to stimulate its listing economy. Reports say China’s largest banks are preparing to cut interest rates on existing mortgages to support consumer spending and the property sector.

In overnight news, the Euro zone economic sentiment index dropped to 93.3 in August from 94.5 in July, but was in line with market expectations.

Gold market poised for rally as consumer demand set to pick up - SSGA's Geroge Milling-Stanley

The key outside markets today see the U.S. dollar index lower. Nymex crude oil futures prices are firmer and trading around $81.75 a barrel. The benchmark U.S. Treasury 10-year note is presently fetching 4.12%.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the advance economic indicators report, pending home sales and the weekly DOE liquid energy stocks report.

Live 24 hours gold chart [Kitco Inc.]

Technically, the gold futures bears still have the overall near-term technical advantage but the bulls have gained momentum this week. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at $1,975.00 and then at $1,985.00. First support is seen at $1,954.20 and then at $1,950.00. Wyckoff's Market Rating: 4.0

Live 24 hours silver chart [ Kitco Inc. ]

The silver bulls have the overall near-term technical advantage and have momentum. A fledgling price uptrend is in place on the daily chart. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at the July high of $25.82. The next downside price objective for the bears is closing prices below solid support at $23.50. First resistance is seen at this week’s high of $25.195 and then at $25.50. Next support is seen at $24.50 and then at $24.31. Wyckoff's Market Rating: 6.5.

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.