Gold Down After ECB Minutes And Ahead Of US Employment Report
Precious metals such as gold and silver are trading flat-to-down on Thursday as investors are digesting ECB minutes and possible outcomes for Friday’s Non-farm payrolls.
With fewer fears on global economic slowdown on the table, investors are now focusing on the March employment report for the United States that will take the scene on Friday, April 5.
Experts are waiting 180K new jobs created in March, also a considerable revision for the 20K number posted in February. However, the latest ADP number published this week raised red flags regarding any optimistic expectation.
Any number below 180K will fuel concerns on economic slowdown while putting the dollar on the defensive and gold’s bulls on the attack.
ECB minutes and dovish stance
The ECB is also sending mixed signals about how the eurozone economy is doing. According to its March meeting minutes, the bank expects robust growth to return later this year; however, the bank acknowledges the economy is in an extended soft patch which length is still unclear.
The uncertainty has increased in the last month, the ECB cites trade tensions all around the world, but specifically the US-China crisis. ECB didn’t say names but referred to that.
The US-China trade crisis still there
In the China-US trade crisis, good news are back as optimism about a peaceful and friendly agreement is rising. However, Michael McCarthy, chief market strategist at CMC Markets, said to CNBC that “if the trade talks drag out we could see further support for gold because of its implications on growth.”
Remember that last week, White House economic adviser Larry Kudlow said that talks between the United States and China made “good headway.”
Dollar index up
In this framework, the dollar index recovered from 97.00 and it is now trading at intra-day highs around 97.25. DXY is 0.15% positive on the day, and it seems the unit is ready to attack the 97.50 level.
However, as the market is in wait-and-see mode, a break above 97.50 is not likely before Nonfarm payrolls on Friday.
Dollar index is containing gold too, but the metal is not translating it in significant losses.
Gold trapped in range, bears increase pressure
Gold is trading negative on Thursday as investors are digesting firm dollar index and risk on environment. XAU/USD is currently trading at 1,286, 0.25% negative on the day.
The metal remains inside the same range between 1,285 and 1,295 that have been traded in the last few sessions.
“A support base could be forming but whether it holds or not will be determined by the U.S. Dollar,” James Hyerczyk said in a recent article.
Below current levels, XAU/USD will face its first support at 1,280. Then, check 1,275, 2019 lows and the 200-day moving average at 1,248.
Silver tests 2019 lows
Silver is trading down on Thursday as investors are reluctant to take risks and the metal is following its correlation with gold.
XAG/USD is now trading at 14.90, 1.20% negative on the day and pressuring the unit to reach fresh 2019 lows below 14.85.
If the pair breaks below 2019 low at 14.85, it will find next supports at 14.80, and then 14.50.