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Selling pressure in gold following the release of ADP’s private sector jobs report

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Gold prices tumbled following the release of the ADP private sector’s jobs report which came in well above analysts’ expectations. Economists surveyed by the Wall Street Journal had forecast that today’s ADP report would indicate an increase of 680,000 new private sector jobs added in May. The actual number came in closer to a million with the report indicating that private sector employment for new jobs added in the month of May came in at 978,000.

Many traders and analysts believe that today’s ADP report might be a precursor to a rebound in nonfarm payrolls for May which will be reported and released by the US Labor Department tomorrow. Currently economic forecasts have estimated that new jobs in May will come in indicating an increase of 671,000 jobs. That is a huge increase from the tepid jobs report last month which came in at 266,000.

As reported by MarketWatch, “The ADP survey is a poor bellwether month-to-month historically for the government’s official employment report, but they are both moving in the same direction this year. Economists forecast an overall increase of 671,000 new jobs in May in the Labor Department data due Friday. The tally, to be released Friday at 8:30 a.m. Eastern, also includes government workers.”

The report coupled with dollar strength put strong selling pressure taking the most active August 2021 Comex gold contract to an intraday low of $1866.70, before slightly recovering. As of 4:30 PM EST gold futures are currently fixed at $1872.70, a net decline of $37.20 (-1.95%) in trading today. Silver also declined by 2.44%, a total of approximately $0.69 to $27.515.

On Tuesday, June 1 gold traded to an intraday high of approximately $1920. This following the extended three-day holiday weekend in the United States, Memorial Day. The last time opened above that price point was January 7 of this year, however on the following day, January 8 gold opened just below that price point and then tumbled closing at $1835 an ounce.

On a technical basis we show that gold is still in a defined long-term bullish market with both spot and futures pricing trading well above their respective 200 day moving averages. It is also where we believe there is current support. Our support levels for gold futures begin at $1851, the 61.8% Fibonacci retracement, down to $1847 which is the current fix of gold futures 200 day moving average.

Interestingly enough we had a golden cross occur between the  50 day moving average crossing above the 100 day moving average. Since then they have widened slightly, however the distance between those two key moving averages is only $4.50 with the 100 day moving average currently fixed at $1795, and the 50 day moving average currently fixed at $1799.50.

Wishing you, as always, good trading and good health,

Gary S. Wagner - Executive Producer