Gold Sees Solid Gains on Weak U.S. Data, Bullish Outside Markets
San Francisco (Apr 1) Gold prices ended the U.S. day session sharply higher Wednesday, boosted on heavy short covering in the futures market and bargain hunting on the spot (cash) market. Some downbeat U.S. economic data also propelled gold and silver prices to the upside. Bullish “outside market” forces further worked in favor of the precious metals bulls on this day, as the U.S. dollar index was lower and crude oil prices were sharply higher. June Comex gold was last up $21.70 at $1,204.90 an ounce. May Comex silver was last up $0.357 at $16.955 an ounce.
The March ADP national employment report was released Wednesday morning and came in at up 189,000 in March, which was a significant miss to the downside. Gold prices saw a modest pop to the upside immediately after that report was released. Gold’s gains accelerated when weaker U.S. auto industry sales were reported and when downbeat U.S. manufacturing data was released. Wednesday’s U.S. economic data fell squarely into the camp of the U.S. monetary policy doves and calls into question whether the Federal Reserve will be able to raise interest rates in 2015.
Focus of the market place is turning to Friday’s U.S. jobs report for March. The key non-farm payrolls number is expected to come in at up 248,000. However, with today’s ADP employment report missing to the downside, many market watchers are now wondering if the more important jobs report from the Labor Department on Friday will also be weaker than expected. U.S. markets are closed Friday for the Good Friday holiday. Thus, much of the market reaction to Friday’s jobs report is likely to be seen on Monday.
The United Nations-Iran nuclear talks continued Wednesday, one day past the supposed deadline for an agreement. Crude oil prices have seen downside pressure this week, on ideas an agreement could be reached that would put Iranian crude oil back on an already glutted world market. However, the U.S. has said odds are not high that any agreement will be reached.
In other overnight news, China’s purchasing managers’ index came in above 50.0 in March. The data was deemed upbeat by the market place. The Eurozone manufacturing purchasing managers’ index came in at 52.2 in March versus 51.0 in February, according to the data firm Markit.
The World Bank reported today that Russia’s economic situation has worsened. The Bank said Russian GDP will be down 3.8% in 2015, and will be down even more if crude oil prices average $45 a barrel.
The London P.M. gold fixing is $1,197.00 versus the previous A.M. fixing of $1,181.25.
Technically, June gold futures prices closed nearer the session high today and saw heavy short covering and bargain hunting. Gold bears still have the overall near-term technical advantage. However, follow-through buying on Thursday and a bullish weekly high close would give the bulls some good upside technical momentum. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the March high of $1,223.00. Bears' next near-term downside price breakout objective is closing prices below solid technical support at this week’s low of $1,178.20. First resistance is seen at today’s high of $1,208.70 and then at last week’s high of $1,220.40. First support is seen at $1,200.00 and then at $1,190.00. Wyckoff’s Market Rating: 3.5
May silver futures prices closed nearer the session high on short covering and bargain hunting. Bears still have the slight near-term technical advantage in silver. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at the March high of $17.405 an ounce.
Source: KitcoNews
