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James Hyerczyk
Comex Gold

Gold is trading lower on Thursday following yesterday’s steep break as speculators reduced their safe-haven positions after U.S. President Donald Trump’s remarks on the Iran conflict dampened investor worries about further escalation of geopolitical risks in the Middle East.

The precious metal rose sharply on Wednesday after Iran launched more than a dozen ballistic missiles against military bases housing U.S. troops in Iraq. The strike followed the U.S. killing of Iran’s top general, Qasem Soleimani, last Thursday in Baghdad. Iran had promised retaliation after the attack.

At 10:52 GMT, February Comex gold futures are trading $1548.20, down $12.00 or -0.77%. On Wednesday, the market hit a multi-year high at $1613.30, before settling at $1560.20.

President Donald Trump said on Wednesday the United States did not have to respond militarily to Iran’s attack, while Iranian Foreign Minister Mohammad Javad Zarif said the rocket strikes “concluded” Tehran’s retaliation.

Gold is also being pressured by a sharp rise in U.S. Treasury yields and a firmer U.S. Dollar. Both were supported on Wednesday by a much stronger U.S. private payrolls report.

Trump, Zarif Comments Put Investors at Ease

President Trump said on Wednesday Iran appeared to be “standing down” but added the U.S. will “immediately impose additional punishing economic sanctions on the Iranian regime.”

After Iran launched a missile attack against air bases in Iraq that housed U.S. troops, Iran’s Foreign Minister Mohammed Javad Zarif tweeted”

“Iran took & concluded proportionate measures in self-defense under Article 51 of UN Charter targeting base from which cowardly armed attack against our citizens & senior officials were launched. We do not seek escalation or war, but will defend ourselves against any aggression.”


U.S. Private Payrolls Post Largest Gain in Eight Months

Helping to drive Treasury yields and the U.S. Dollar higher and gold prices lower was a report showing U.S. private payrolls increased by the most in eight months in December, pointing to sustained labor market strength though job gains last month were likely flattered by a seasonal quirk, according to Reuters.

The ADP National Employment Report on Wednesday showed private payrolls jumped by 202,000 jobs last month, the largest gain since April, after an upwardly revised 124,000 rise in November. Private job growth averaged 163,000 jobs per month in 2019, slowing from an average increase of 219,000 in 2018.

Economists polled by Reuters had forecast private payrolls advancing 160,000 last month following a previously reported 67,000 rise in November.

Daily Forecast

In the absence of any escalation of the conflict between the United States and Iran, gold investors are likely to shift their focus on value. The nearest value zone is $1533.20 to $1514.30. Buyers could step in on a test of this area. Gains could be limited by rising Treasury yields, a stronger U.S. Dollar and increasing demand for risky assets.

On Thursday, gold traders will have the opportunity to react to a pair of Fed speakers and weekly Unemployment Claims. They are expected to come in at 221K.

The main focus for traders, however, will be Friday’s U.S. Non-Farm Payrolls report. The selling pressure could continue if the numbers come in stronger than expected.

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