Gold prices weaker following sobering ADP jobs data

May 6, 2020

New York (May 6)  Gold prices are trading modestly down in early U.S. dealings Wednesday, following the U.S. ADP employment report for April that showed a staggering loss of U.S. jobs. June gold futures were last down $0.90 an ounce at $1,710.00. July Comex silver prices were last up $0.18 at $15.27 an ounce.

The just-released U.S. ADP national employment report for April came in at down at 20.236 million—a sobering reminder of the state of the U.S. and global economy at present, amid the Covid-19 pandemic. The marketplace expected an ADP figure of down around 22 million. The ADP report is a precursor to Friday morning’s more important employment situation report from the U.S. Labor Department.

Global stock markets were mixed to firmer in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Traders and investors are showing a bit more risk appetite at mid-week, as Nymex crude oil futures prices have rebounded sharply from single-digit levels seen in late April. Also, U.S.-China tensions have ratcheted down just a bit as both sides have toned down their harsh rhetoric—at least for the moment. Still, the Covid-19 pandemic lingers to keep the marketplace generally uneasy. While parts of North America and Europe reopen for business, the numbers of Covid-19 cases and deaths in the U.S. continue to rise at an alarming rate.

In overnight news, the Euro zone retail sales in March were reported down 11.2% from February and down 9.2%, year-on-year. Those numbers were records for declines. Also, the Euro zone services purchasing managers index (PMI) was reported at 12.0 for April. A reading below 50.0 suggests contraction in the sector.

The important outside markets see Nymex crude oil prices slightly weaker and trading around $24.00 a barrel in June futures. Prices have more than doubled from the recent low. The U.S. dollar index is higher again today and the greenback bulls are having a good week. The Euro currency is pressured this week as the European Central Bank’s authority to stimulate the Euro zone economy has been called into question by Germany. 

Other U.S. economic reports out Wednesday include the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the global services PMI.

Technically, the gold bulls have the overall near-term technical advantage but need to show fresh power soon to keep alive an uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at the April high of $1,788.80. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,666.20. First resistance is seen at Tuesday’s high of $1,717.80 and then at this week’s high of $1,726.00. First support is seen at $1,700.00 and then at this week’s low of $1,695.40.


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