- Gold stabilizes despite the disappointing employment numbers of the US private sector.
- ADP data does not meet expectations, with the May report showing 37,000 jobs added to the US private sector, well below the 115,000 estimate.
- The US president, Trump, has reacted to ADP’s negative figures publishing in Truth Social, blaming the Fed and Powell for being “too late” to cut rates.
- Commercial tensions between the US and China are still high, with Trump describing China as “extremely difficult” to treat.
- Gold prices fluctuate while psychological support at $ 3,350 is maintained.
Gold prices are struggling to win impulse after a disappointing US ADP report, which showed that 37,000 jobs were added to the US private sector in May, well below the estimated number of 115,000.
In response to disappointing data, US president, Trump, published in Truth Social, pressing the Federal Reserve (Fed) to cut the rates.
With Trump’s comments stating that the FED president is still “too late” to cut the rates, markets seem to be centered on the non -agricultural payroll report (NFP) on Friday.
Source: Social Truth
ADP data increases doubts about the resilience of the US labor market before the Friday NFP report
The report, published monthly by the ADP Research Institute, is perceived as an indicator advanced by many economists, which is published two days before the NFP report. Although gold prices were generally stable on Wednesday, doubts about a commercial agreement between the US and China continued to grow, given the recent statements of the president of the USA, Donald Trump.
Trump said Wednesday that it is “extremely difficult” to make a commercial agreement with Chinese President Xi Jinping, reports CNBC. The comments arise while Washington has fed the speculation that a call between the two leaders could occur this week.
“I like President XI of China, I have always liked and always like it, but it is very hard, and extremely difficult to make an agreement with him !!!” Trump wrote in Truth Social.
The spokesman of the Chinese Ministry of Foreign Affairs, Lin Jian, replied, stating that “China’s principle and position to develop relations between China and the US are consistent,” Bloomberg reports. The comments suggest that China has not changed its position since the meeting with US representatives last month.
The prospects for a weak commercial agreement with China, or even any agreement, generally benefit safe refuge assets such as gold.
50% US tariffs on steel and aluminum are in force
With a tariff rate of 50% now in force for imports of aluminum and steel to the USA (USA), commercial relations between the US and their global counterparts remain tense. This provides an additional tail wind for gold prices and a wind against for the main risk assets.
After positive commercial conversations between the United States (USA) and China in mid -May, which helped relieve tensions between the two largest economies in the world, negotiations seem to have stagnated.
With both parties accusing each other of violating the agreement reached in Geneva on May 12, uncertainty about commercial relations remains a key engine of gold prices.
However, the enemy of gold seems to be the trajectory of interest rates of global central banks, which are preparing to announce the next round of decisions about rates this week. Since investors who possess ingots or gold currencies do not obtain yields to maintain these assets, interest rates are seen as a threat, especially when banks offer higher rates.
On Wednesday, the markets are expected to monitor the publication of the US ADP Employment Report at 12:15 GMT in search of tracks on how the private sector labor in May served in May. The report comes before the publication of Non -agricultural payrolls of the US on Friday, which is expected to provide additional information on the resilience of the US labor market.
Diario del Oro summary: China, tariffs and employment data return to the focus
- The Geneva Agreement had established a 90 -day break in the tariff escalation between China and the US, with the US reducing tariffs on Chinese goods from 145% to 30%, and China reducing tariffs from 125% to 10%. The agreement also included provisions for China to raise restrictions on the export of critical minerals essential for US industries.
- With the European Central Bank (ECB) preparing for the decision on interest rates on Thursday, the publication of the purchasing managers index (PMI) throughout the morning has provided a mixed image of the health of the manufacturing and services sectors in the Eurozone. The combination of clear signals of an economic deceleration and a decrease inflation is perceived as a warning signal of a possible recession, with the expense and demand of goods and services that are expected to fall.
- For the ECB, the inflation data published on Tuesday supported the expectations of the market of an additional cut of 25 basic points (PBS) on Thursday.
- Although the data of the PMI of Italy and France exceeded the estimates, Germany’s data continued to disappoint, suggesting that the business confidence and the growth prospects of the country are still umbrella. Since Germany is the largest economy in the Eurozone, decreasing growth forecasts exert additional pressure on the ECB to provide support to the European economy continuing with interest rate cuts.
- As for the Fed, the CME Fedwatch tool continues to show a probability of 55.6% that the US Central Bank announced a rate cut in September. A negative surprise in the ADP number could provide temporary relief for gold, since it would increase the possibilities that the Fed cuts rates in July. For now, the chances of such movements are not significant.
Technical Gold Analysis: Prices remain in conflict about $ 3,350
Gold prices are trading in a phase of consolidation above a symmetrical triangle in the daily graph, with the price around $ 3,355.
Despite a temporary break over the resistance of the triangle on Monday, prices have failed to gain impulse above the current level of psychological support of $ 3,350.
The simple mobile average (SMA) of 20 days, currently at $ 3,292, offers additional support.
A break below this level and the base of the triangle about $ 3,290 (aligned with the fibonacci setback of 23.6% of the Rally from January to April) would expose the support zone of $ 3,057, marking the midpoint of the movement mentioned above.
A deeper fall could be extended to 2,804 $, the fibonacci setback of 78.6%, if the bearish pressure intensifies. The relative force index (RSI) in 55 supports a slightly bullish inclination, but a clear directional movement will depend on a break in the current range.
Daily Gold Graph
Fed Faqs
The monetary policy of the United States is directed by the Federal Reserve (FED). The Fed has two mandates: to achieve prices stability and promote full employment. Its main tool to achieve these objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the objective of 2% set by the Federal Reserve, it rises interest rates, increasing the costs of loans throughout the economy. This translates into a strengthening of the US dollar (USD), since it makes the United States a more attractive place for international investors to place their money. When inflation falls below 2% or the unemployment rate is too high, the Federal Reserve can lower interest rates to foster indebtedness, which weighs on the green ticket.
The Federal Reserve (FED) celebrates eight meetings per year, in which the Federal Open Market Committee (FOMC) evaluates the economic situation and makes monetary policy decisions. The FOMC is made up of twelve officials of the Federal Reserve: the seven members of the Council of Governors, the president of the Bank of the Federal Reserve of New York and four of the eleven presidents of the regional banks of the Reserve, who exercise their positions for a year in a rotary form.
In extreme situations, the Federal Reserve can resort to a policy called Quantitative Easing (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non -standard policy measure used during crises or when inflation is extremely low. It was the weapon chosen by the Fed during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy high quality bonds of financial institutions. The one usually weakens the US dollar.
The quantitative hardening (QT) is the inverse process to the QE, for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the bonds that it has in portfolio that they expire, to buy new bonds. It is usually positive for the value of the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
