2023-08-02 15:20:00
U.S. ADP private employment data better than expected, gold prices fell under pressure
During the New York session on Wednesday (August 2), gold prices fell rapidly as the U.S. automatic data processing ADP reported that the U.S. labor market added 324,000 private jobs in July, while investors expected an increase of 189,000, but below 6 497,000 per month. The employment data set a positive tone for the Fed’s September monetary policy meeting, as labor market conditions remain tight.
Elsewhere, gold prices fell following the impact of lower gold demand reported by the World Gold Council (WGC) resurfaced and as investors digested a third straight quarter of contraction in factory activity.
Market fundamentals news trends:
① Precious metals suffered heavy selling on Tuesday following the World Gold Council reported a drop in demand for gold from central banks around the world. Gold purchases by central banks in the first half of 2023 are down 2% year-on-year due to rising interest rates and expensive bars.
② A sharp recovery in U.S. factory orders keeps gold prices on a bearish trajectory. U.S. new factory orders unexpectedly rose to 47.3 in July, defying expectations for a revised 44.0 reading from 45.6 in June.
③ The Institute for Supply Management (ISM) reported that the manufacturing PMI contracted for the ninth consecutive month. July’s figure edged up to 46.4 from 46.0 previously, but missed expectations for a reading of 46.8. All numbers below 50.0 are crunched. Three straight quarters of contraction in the manufacturing PMI are enough to show the fallout from the Fed’s aggressive rate-tightening cycle.
④The number of JOLTS job vacancies in the United States in July fell to 9.582 million compared with expectations and the previous value. The July data hit the weakest level in more than two years as wage growth slowed and employment change weakened.
⑤ For more guidance on the labor market, investors will focus on U.S. non-farm payrolls and the unemployment rate due at 12:30 GMT on Friday. Tight labor market conditions might force the Federal Reserve to raise interest rates further at its September monetary policy meeting.
⑥Chicago Federal Reserve Bank President Ostan Goolsby said on Tuesday that inflation is expected to return to 2%, while unemployment will not rise significantly.
⑦ The U.S. dollar index (DXY) showed a strong recovery on Tuesday despite Fitch downgrading the credit rating of the U.S. government, citing concerns regarding long-term fiscal spending.
Technical analysis: Gold prices fell below a fresh three-week low around $1,940.00 ahead of key labor market data. Gold prices are trading below the 20-day and 50-day exponential moving averages (EMAs), which suggest a bearish short-term and medium-term trend. Gold prices have formed a head-and-shoulders chart pattern on shorter time frames, with a breakdown expected if the asset fails to hold a neckline drawn around a fresh three-week low.
At 23:17 Beijing time, the spot gold price was quoted at US$1,935 per ounce.
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