Commodity prices are pushing lower in European trade as dismal European economic data weighs on demand expectations for growth-sensitive crude oil and copper while risk aversion encourages safe-haven flows into the US dollar, amounting to de-facto downward pressure on gold and silver. S&P 500 stock index futures are pointing lower, arguing for more of the same as Wall Street comes online.
On the data front, the US ADP Employment report is in the spotlight, with expectations pointing to a 170K increase in private employment in April after a 209K print in the previous month. The likelihood of a Fed QE3 program remains a driving theme across financial markets. This means a soft outcome is likely to be taken as fodder for stimulus hopes and weigh on the greenback, boosting gold and silver. Yesterday’s response to better-than-expected ISM figures suggests risky assets are responding to economic data in a straight-forward fashion however, so a weak jobs print would likely reinforce headwinds already facing sentiment heading into the session. Needless to say, an upside surprise stands to produce the opposite results.
Comex E-Mini Copper (NY Close): $3.844 // +0.014 // +0.37%
Prices are retesting former support at a rising trend line set from mid-February, with a Hammer candlestick pointing to ebbing bullish conviction and hinting a reversal lower may be ahead. Initial support lines up at 3.713. Alternatively, a break higher exposes the next upside barrier just below the 4.000 figure in the 3.933-3.988 area.
Spot Gold (NY Close): $1,662.43 // -2.32 // -0.14%
Unchanged from yesterday: “Prices took out the top of a falling channel set from early March, with the bulls now aiming to challenge resistance at 1,680.00 and 1,696.88 marked by key swing highs set on April 12 and March 27.” The channel top, now at 1,654.93, is acting as near-term support.