Gold Higher on Short Covering, Bargain Hunting

New York (Apr 2)  Gold prices are higher in early U.S. trading Wednesday, on a short-covering and bargain-hunting bounce following recent selling pressure that drive prices to a seven-week low on Tuesday. The market traded modestly up in overnight dealings, and then spurted a bit higher at the U.S. Comex futures open. June gold was last up $9.40 at $1,289.20 an ounce. Spot gold was last quoted up $9.60 at $1,290.00. May Comex silver last traded up $0.277 at $19.965 an ounce.

The U.S. ADP national employment report was just released and showed a rise of 191,000 jobs in March. The number was slightly lower than expected, but still a decent number given recent month’s jobs numbers. The gold market shed just a bit of its gains in the wake of the ADP report.

Arguably the most important economic data point of the week and of the month is Friday’s March U.S. employment report from the Labor Department. The key non-farm payrolls number is expected to be up 200,000. Trading in many markets could be constrained ahead of that report.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ISM New York report on business, manufacturers’ shipments and inventories and the weekly DOE energy stocks report.

In overnight news, the European Union’s producer price index dropped 0.2% in February and was down 1.7% year-on-year. The year-on-year decline was the largest since late 2009 and is yet another element adding to the deflation concerns in the EU. The PPI report will put more pressure on the European Central Bank to ease its monetary policy in order to jumpstart economic growth in the EU. The ECB holds its monthly monetary policy meeting on Thursday, including a press conference from ECB president Mario Draghi. Most do not expect the ECB to make a major move Thursday, but Draghi’s comments at his press conference could very well give guidance on what the ECB will do in the coming weeks.

Source: FORBES