Gold price down following strong U.S. ADP jobs report

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(Kitco News) - Gold and silver prices are lower in early U.S. trading Thursday, following a stronger-than-expected U.S. ADP employment report that showed a gain in jobs that was double market expectations. The report pushed the U.S. dollar index well off its overnight low and also pushed U.S. Treasury yields higher. August gold was last down $11.70 at $1,915.70 and September silver was down $0.322 at $23.08.

The June U.S. ADP report showed a rise of 497,000 jobs, compared to market expectations for a gain of 220,000. That data falls into the camp of the U.S. monetary policy hawks, who want to see the Federal Reserve continue to raise interest rates.

The latest FOMC minutes from the Federal Reserve were released Wednesday afternoon and they also leaned hawkish. The minutes from the June 13-14 meeting showed that while almost all Fed officials deemed it "appropriate and acceptable" to keep the key Fed funds rate unchanged at a 5.0-5.25% range, some would have supported a 0.25% increase, according to a Bloomberg report. The minutes also said "almost all" FOMC members agreed that further tightening of U.S. monetary policy will be needed this year. The gold and silver markets did not react strongly to the minutes.

U.S. economic releases Thursday include the weekly jobless claims report, the Challenger job-cuts report, the ADP national employment report, U.S. international trade in goods and services, the U.S. services PMI, the ISM report on business services, the job openings and labor turnover (JOLTS) report, the global services PMI, monthly chain store sales and the weekly DOE liquid energy stocks report.

Asian and European stock markets were mostly lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins.

Meantime, the U.S. employment situation report for June is out Friday. The key non-farm payrolls number is forecast up 240,000 versus a gain of 339,000 in the May report. The strong ADP jobs number has many now thinking Friday's jobs report will also be stronger.

In other news, U.S. Treasury Secretary Janet Yellen travels to China Thursday for meetings with high-level Chinese officials. The meeting comes at a time when U.S.-China tensions are running very high.

The key outside markets today see the U.S. dollar index lower but up from overnight lows. Nymex crude oil prices are slightly down and trading around $71.50 a barrel. The benchmark 10-year U.S. Treasury note yield is rising and presently fetching 4.031%.  

Technically, the gold futures bears have the overall near-term technical advantage. A two-month-old price downtrend is in place on the daily bar chart. Bulls' next upside price objective is to produce a close in August futures above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at the overnight high of $1,934.00 and then at this week's high of $1,942.90. First support is seen at $1,900.00 and then at $1,890.00. Wyckoff's Market Rating: 3.5

The silver bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing September futures prices above solid technical resistance at the June high of $24.835. The next downside price objective for the bears is closing prices below solid support at the June low of $22.34. First resistance is seen at this week's high of $23.535 and then at $23.75. Next support is seen at last week's low of $22.485 and then at the June low of $22.34. Wyckoff's Market Rating: 4.0.