Gold Prices Rebound from Support as Dollar Eases

Gold prices rebounded on Wednesday, buoyed by a climb in the Euro, and despite another strong U.S. private payroll report. The Eurozone employment has tumbled since 2013 and is now near historical lows.  GDP growth continued to slow which likely means continued accommodative EU policy. This will weigh on the Euro and remain a thorn in the side for gold prices.

Technicals

After tumbling on Tuesday, gold prices rebounded back to the breakdown level after hitting support near the 200-day moving average at 1,304.  Resistance is seen near 1,308 and then the 10-day moving average at 1,322. Momentum is negative as the MACD (moving average convergence divergence) histogram prints in the red with a declining trajectory which points to lower prices. The fast stochastic is stabilizing and currently showing a reading near 10, below the oversold trigger level of 20 and could foreshadow a correction.

Eurozone March unemployment steady

Eurozone March unemployment steady at 8.5%, as expected. Unemployment has come down considerably from the high of 12.1% in February 2013, but national rates continue to vary sharply, ranging from just 3.3% in Malta to 16.1% in Spain in March. Greek numbers, which are only available until January, are even higher at over 20%. Youth unemployment also remains unsustainably high at 17.3% for the Eurozone as a whole and with rates of 35% in Spain and over 40% in Greece.

Eurozone Q1 GDP growth slowed

Eurozone Q1 GDP growth slowed to 0.4% quarter over quarter, Q4 was revised up to 0.7% quarter over quarter. This means growth was even higher at the end of last year than previously assumed, which lifts the growth trajectory and also puts the slowdown in Q1 into context. The annual growth rate fell back to a still strong 2.5% from 2.8% year over year in the last quarter of 2017.

U.S. ADP reported private payrolls increased

U.S. ADP reported private payrolls increased 204k in April after the 228k gain in March which was revised from 241k. The service sector added 160k workers, while the goods producing sector added 44k. For the latter, manufacturing jobs were up 10k, with construction 27k higher.