Gold prices are trading under pressure on the first trading session of the Q3, following a stronger than expected U.S. ISM manufacturing report, which buoyed the greenback paving the way for lower gold prices. U.S. construction spending also increased following a sharp climb in April which also helped generated headwinds for the yellow metal. EU unemployment held steady in May, which was in line with expectations.
Gold prices are testing last weeks lows near 1,247 and a break of this level would lead to a test of target support near the December 2017 lows at 1,236. Resistance on the yellow metal is seen near the 10-day moving average at 1,260. Momentum is negative but decelerating as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which reflects consolidation. The fast stochastic is printing a reading of 6, well below the oversold trigger level of 20 which could foreshadow a correction in gold prices.
U.S. ISM manufacturing index increased More than Expected
U.S. ISM manufacturing index increased 1.5 points to 60.2 in June, better than expected, after rising 1.4 points to 58.7 in May. Expectation wre This number is just off the 60.8 from February which a 14-year high. The employment component dipped to 56.0 from 56.3. And new orders slipped to 63.5 from 63.7. New export orders rose to 56.3 from 55.6. Prices paid fell to 76.8 from 79.5 as some pressures slowed.
U.S. construction spending Rose
U.S. construction spending rose 0.4% in May after climbing 0.9% in April which was revised from 1.8%, and versus March’s -0.9% which was revised from -1.7%. And February was boosted to a 2.3% clip from 1.2%. Residential spending was up 0.8% in May versus 0.5% in April which was revised from 4.4%. Nonresidential spending edged up 0.1% following a 1.2% jump which was revised from unchanged. Private construction spending was up 0.3% versus 0.4% which was revised from 2.8%. Public spending was up 0.7% from 2.3% which was revised from -1.3%.
Eurozone unemployment held Steady
Eurozone unemployment held steady at 8.4% in May, unchanged from April, which in turn was revised down from 8.5% reported initially. Confidence is coming down, but so far the backlog of works continues to underpin ongoing job creation, as PMI readings today also indicated. There remain huge differences across countries, however, especially for youth unemployment, which is adding to social tensions and underpinning EU fatigue.