Gold steadied on Wednesday, as a stronger dollar pushed the metal off Tuesday’s 9½-month high, but the precious metal remained above $1,300 on renewed tensions between Washington and North Korea. The greenback rose 0.6 percent versus a currency basket following stronger-than-expected private payrolls data. The move marked the greenback’s recovery from a 2½-year low hit Tuesday after North Korea fired a ballistic missile over Japan. U.S. President Donald Trump on Wednesday said “talking is not the answer” to the tense standoff with North Korea over its nuclear missile program. His defense chief, however, swiftly asserted that the United States still has diplomatic options. In economic news, private jobs forecaster ADP released their private sector August hiring number which came in at up 237,000 jobs, which was much higher than the forecast of up 185,000. Gold prices dropped $2 or $3 on the news, which fell into the camp of the U.S. monetary policy hawks, who want to see the Federal Reserve raise interest rates again this year. Also released this morning was the second revision for GDP, and came in at up 3.0%. That was the best GDP reading in two years. That figure was also higher than the forecast rise of 2.8% and did add a bit more selling pressure to the gold market after the report’s release. For the session gold dropped $4.80 to settle at 1314.1. September silver fell slightly losing just over .04 cents to close at 1740.0.
Both gold and silver have experienced some back and fill on the charts as tensions with North Korea have subsided somewhat while the Dollar has bounced higher reflecting stronger economic data. Still though, dips have to be seen as near term buying opportunities as I don’t believe the trade will want to be short into a three day holiday weekend. The non-farm payroll report will likely determine how much gold will fall before weekend buying steps in mid morning on Friday. If a liquidation were to occur for both gold and silver, the jobs number must equal or even surpass the ADP number of 237K with prior months revised to show better hiring. This will support a higher dollar near term which would in turn most likely push gold down to 1305.7 and below there at 1293.5. Should the jobs number disappoint or come in a the midpoint of expectations, look for gold to quickly test 1324.0. Strong resistance sits up at 1332.4, a level which I have mentioned in previous posts as an upside target. That level represents a yearly R1. Gold’s last push higher on Tuesday took the December contract to a high of 1331.9, missing the R1 by fifty cents. Tomorrow we could see some end of month profit taking in both gold and silver along with it being first notice day.
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