On Wednesday, weak physical demand and losses in equities and other commodities caused the price of gold to recede. The metal came under pressure after ADP’s April employment report showed that U.S. companies hired the fewest people in seven months. Many people interpreted this to mean that the economy has lost some momentum.
However, some market watchers said the ADP data was not enough to alter a view that several economic indicators have smashed hopes of further quantitative easing, or government bond purchases, by the Federal Reserve.
The gold market is anticipating Friday’s April nonfarm payrolls data for the latest clue about whether the U.S. central bank will continue to keep interest rates near zero for the next several years and to use stimulus to boost economic growth.
Frank McGhee, head precious metals trader of Integrated Brokerage Services LLC, said, “Unless we get a truly dismal number on Friday, the payrolls data will not radically push the market higher going forward based on QE.
Technical analysts said gold must breach its 100-day moving average key resistance near $1,670 an ounce to extend gains. The metal briefly rose above that level on Tuesday but was currently trading about $15 below it. Preliminary Reuters data showed that U.S. gold futures for June delivery settled down $8.40 an ounce at $1,654. Trading volume was about 20 percent below its 30-day average.
In related news, holdings of gold-backed, exchange-traded funds monitored by Reuters, which issue securities backed by physical gold and proved a popular investment during the financial crisis, fell by 194,000 ounces in April and edged below 70 million ounces on Tuesday for the first time since February 2nd.
Among other precious metals, silver was down 1.1 percent at $30.61 an ounce. Platinum group metals fell a day after U.S. auto sales on average rose 2.3 percent in April. PGM investors now await a platinum and palladium industry survey by precious metals consultant Thomson Reuters GFMS.
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