Gold has posted sharp losses in the Wednesday session, erasing much of the gains seen on Tuesday. In North American trade, the spot price for an ounce of gold is $1324.71, down 0.75% on the day. In economic news, there was positive news on the labor front, as ADP Nonfarm Payrolls report ticked higher to 235 thousand, easily beating the estimate of 199 thousand. On Thursday, the US releases unemployment claims.
Gold prices continue to show strong fluctuation, as the markets remain focused on President Trump’s threat to impose heavy tariffs on imported steel. The announcement has infuriated US trading partners, as well as sharp criticism from senior Republican lawmakers. There was further drama on Tuesday, as Gary Cohen, Trump’s economic adviser, resigned. Cohen was a strong advocate of free trade, so his resignation could weaken opposition in the White House to the tariffs. Gold posted strong gains on Tuesday, but has given up much of these gains on Wednesday. Will Trump make good on his threat or back off? Until the situation is resolved, traders should be prepared for continuing volatility from gold.
Good news on the employment front translated into losses for gold on Wednesday. The ADP nonfarm payrolls report, which precedes the official nonfarm payrolls report on Friday, ticked upwards to 235 thousand, up from 234 thousand a month earlier. This easily beat expectations, boosting investor risk appetite. The nonfarm payrolls report is also expected to remain steady, and if the indicator can again beat expectations, gold prices would likely head lower.