Gold prices tumbled lower on Wednesday as the dollar continued to drop and US yields moved higher. The rally in yields came after a much better than expected US ADP private payroll report that showed a much smaller drop than expected. The dollar has declined for a 7-straight trading session but the decline in the greenback has failed to lift the yellow metal. Generally, since gold is priced in dollars, a drop in the dollar equates to a rally in gold prices. The risk-on mentality continued to take hold, as stocks continued to soar. This has taken some of the safe-haven bid away from gold prices.
Gold tumbled 1.8% and appears to have held support near the 50-day moving average at $1,694. A break of this level would lead to a test of the May lows at $1,682. Resistance is seen near the 10-day moving average at $1,722. Short term momentum is negative as the fast stochastic generated a crossover sell signal. Medium-term momentum is also negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.
Payrolls Fall Less than Expected
US private payrolls fell another 2.76 million in May according to a report from ADP. This compares to expectations that payrolls would decline by 8.75 million. Job losses were especially deep in large businesses, which reported a decline of more than 1.6 million. Manufacturing took one of the biggest hits as the sector lost 719,000 workers. May’s decline also marked a precipitous drop-off from the 19.6 million plunges in April, an estimate that was revised from the initially reported 20.2 million.
This article was originally posted on FX Empire
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