Gold prices continued to rise following the softer than expected jobs data reported on Thursday, ahead of Friday’s U.S. unemployment report. ADP, U.S. Challenger and the Jobless Claims report all came in weaker than expected. This generated headwinds for the dollar and paved the way for higher gold prices. Gold pushed above former resistance now support near the 10-day moving average at 1,255. Resistance on the yellow metal is seen near the 50-day moving average at 1,290. Momentum will turn positive as the MACD (moving average convergence divergence) index is poised to generate a crossover buy signal. The fast stochastic surged from oversold territory which reflects accelerating positive momentum.
ADP Private Payrolls Missed Expectations
U.S. ADP reported private payrolls increased 177k in June, below expectations, following May’s 189k gain which was revised from 178k. Employment in the goods producing sector rose 29k, manufacturing up 12k and construction up 13k. Jobs in the service providing sector were up 148k, with education/health adding 46k, leisure/hospitality 33k, and trade/transport 24k higher.
The 3k initial claims rise to 231k in the final week of June extended a 10k increase to 228k from 218k in the BLS survey week, as the figures are tracking the June rise expected in advance of an early-July drop related to auto retooling. Claims remain above the 48-year low of 209k seen in late-April, though there is still a modest underlying downtrend in already-tight claims levels that keeps new multi-decade lows in reach. Claims are averaging 224k in June, versus prior averages of 223k in May, 221k in April, 228k in March and the same 224k in February. The 218k June BLS survey week reading compared to higher recent readings of 223k in May, 233k in April, and 227k in March, but it matches the 218k figure in February.
U.S. Challenger reported announced layoffs
U.S. Challenger reported announced layoffs increased 5.7k to 37.2k in June after falling 4.6k to 31.5k in May. But the 12-month pace jumped to a 19.6% year over year clip versus -4.8% year over year. Over the year to date, announced job cuts are up 8% year over year versus the same period in 2017. Retailers led job cuts 73k announced so far in 2018. Restructuring was the number one reason, followed by closings and bankruptcy.