Gold Prices Gain, But Fail to Hold Intraday Highs

Gold futures are currently trading up $3.70 and as of 4:00 PM Eastern standard time, are fixed at $1,205. That makes for a modest gain but well below the highs achieved earlier as gold traded to $1,212.70 an ounce.

About 76% of the gains today can be attributed to investors bidding up the precious yellow metal. The remaining 24% of today’s gains are a result of the fractionally weaker U.S. dollar. Currently, the dollar index is fixed at 94.955 and down 0.169 (-0.18%).

Results of the U.S ADP national employment report were released today indicating that in August 163,000 jobs were added. These numbers came in below economic estimates. However, it will be the Labor Department’s employment report on Friday that fills in the gaps with economists currently forecasting the addition of 190,000 nonfarm payroll jobs added last month.

Friday’s jobs report numbers will be the most critical economic data released this month. With the Federal Reserve’s FOMC meeting scheduled for September 26, Friday’s data will be the last pillar of fundamental data that Federal Reserve members will use to aid and guide their monetary policy decisions. Strong numbers will increase the likelihood that another interest rate hike this month is highly probable.

The CME’s FedWatch tool currently indicates that there is a 99% probability that this month the Federal Reserve will raise Fed funds rates by a quarter of a percent, to 2.0 - 2 ¼%.

Traders will continue to focus on the trade disputes between the United States and China. There is also the trade dispute between the United States and Canada.

According to Reuters, “U.S. and Canadian negotiators started a second day of talks aimed at rescuing the North American Free Trade Agreement on Thursday as the deadline for a deal this week, set out by President Donald Trump, inched ever closer.”

Investors will also continue to focus on current geopolitical turmoil in Turkey and Argentina. These emerging markets have had dynamic devaluations of their currencies, reflecting intrinsic economic trouble in both countries.

Declining prices earlier this week took gold futures to just under $1,200, but this selling pressure was short-lived at best. Now for the second day in a row, we have seen gold have modest but incremental gains taking current pricing back above $1,200 per ounce, a key psychological level. Major resistance is at $1,218, with minor support at $1,200, and major support at $1,178.

Wishing you as always, good trading,