Gold Falls As Dollar Rises Ahead of ADP Non-Farm Jobs Report

The US Institute for Supply Management reported earlier that the ISM Factory PMI for April slid to 50.8, and did not meet the forecast of a 51.6 reading. The manufacturing sector has expanded for the second month, but at a slower pace than in March due to weak global demand.

According to Autodata Corp., April’s total vehicle sales (seasonally adjusted) in the US registered at an annual rate of 17.42 vehicles, 3.6% higher than the reading in the same period last year. The data indicates that American demand for trucks and sport utility vehicles is still strong.

The US dollar is rising ahead of ADP’s report on non-farm employment change, with a forecast of 205,000 jobs added in March. Measuring the strength of the greenback against six peers, the dollar index DXY is now paring its recent losses. The index today bounced back to 93.21 after creating a record low of 91.92. The rally of the global currency is putting a downward pressure on the gold prices.

World stocks on Wednesday are in red territory, continuing the trend so far this week as investors are afraid of a prolonged global growth downturn, which is implied in the weak PMI data seen recently. Nasdaq futures today tumbled to 4308.82, down 0.7% from the previous close. The UK FTSE has also witnessed a fall of 1.3% to 6105.80 from the last settlement.

In response to the negative signals from stock market, investors tend to rush into other safe-haven assets, namely gold, Japanese yen, etc. The demand for this precious is about to increase.

gold d1

Fig. GOLD D1 Technical Chart

GOLD retreated after testing the resistance of 1303.89 on Monday. ADX (14) is pointing down, indicating that the current trend is getting weaker. However, the green arrow below the price chart still suggests a buying position. The commodity is expected to continue falling in the short-term and reverse into an uptrend later.

Trade suggestion

Sell at 1272.49, Stop loss at 1275.33, Take profit at 1268.11

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