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David Becker
Comex Gold
Comex Gold

Gold prices edge higher as the dollar lost some ground following a weaker than expected private payrolls report released on Thursday by ADP. The report weighed on treasury yields as the surprising miss led traders to believe that the Fed might hold rates unchanged following a tightening in September.  The decline in private payrolls was the lowest increase in jobs since October of 2017. Prices are consolidating and will take their cues from trading the greenback.

Technical Analysis

Gold prices moved higher but were unable to push above resistance near the 10-day moving average at 1,201. Additional resistance is seen near the 50-day moving average at 1,217. Momentum appears to be neutral as the MACD (moving average convergence divergence) histogram prints in the black with a flat trajectory which points to consolidation.  The fast stochastic is still reflecting accelerating negative momentum following the recent crossover sell signal.  On a weekly basis it appears that gold is forming a bear flag pattern which is a pause that refreshes lower.  It will be difficult for prices to take another leg down without a dollar rally.

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ADP Payroll Report Missed Expectations

According to ADP private companies added 163K jobs in August which was a significant decline from the 217K added in July.  Expectations were for a rise of 190K jobs. Small businesses were the driving force behind the dip in hiring.  Business with fewer than 50 employees added just 19K jobs in August while medium size firms added 111K. Large companies with more than 500 workers added 31K jobs as trade tariffs concerns kept many companies on the sidelines. Services providers added the bulk of the jobs which increased by 139K.  Business and professional services increased by 35K.  Leisure and hospitality also contributed 25,000, followed by trade, transportation and utilities with 21,000. On the goods-producing side, manufacturing saw 19,000 new jobs and construction added 5,000 workers.

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