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Gold Cracks on ADP Report; China, Europe Show Mixed Signals

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New York City, New York – (StockNewsDesk) – 11/05/2014 — Gold futures cracked more than 2%, while the S&P 500 reached a new all-time high after the job market in the US economy showed strength. The December delivery fell as much as 2.6% after the optimistic report. Prices of the yellow metal remained steady around $1140 levels. According to the experts, gold will be stable around $1135 levels. A slew of economic results were reported today; however, the ADP job report remained positive.

According to the Institute of Supply Management non-manufacturing Purchasing Manager’s Index (PMI) declined to 57.1 compared to a September’s reading of 58.6. This reading was also below expectations of 58.0 levels. The non-manufacturing business activity came down to 60.0, a tad below September’s reading of 62.9. The New Orders index reported a reading of 59.1 lower than September’s 61.0. However, the employment index increased to 59.6, up 1.1 points and ADP non-farm payroll of 230,000 eclipsed the figures. This was well above expectations of 220,000.

An improving US economy, the strength of the US dollar and tapering of the massive bond-buying program has made precious metals unattractive. The strength of the dollar weakens gold prices. The gold futures are trading below the $1150 levels, indicating a bearish trend while silver future prices have crashed to its lowest level since 2010. In addition to all this, there is also speculation that the US government may increase the interest rates in light of an improving economy.

China’s Economy Shows Weak Signal

Copper prices touched a new low as prospects of the Chinese economy weakening seems brighter by the day. China’s HSBC services came in below expectations at 52.9 compared to expectations of 53.9 and September’s reading of 53.5. Copper prices were largely affected as the country accounts for 40% of the global copper demand.

Gold Cracks on ADP Report; China, Europe Show Mixed Signals

European Economy Improving, But Gradually

Growth estimates of the eurozone decreased for the year 2014. European commission estimates decreased to 0.8% from earlier estimates of 1.2%. By 2015, the European commission expects the economy to expand by 1.1% in 2015 compared to 1.7% forecasted earlier. A slew of economic reports was released today of which only Italian and French economies managed to impress investors. Retail sales declined month over month by 1.3% compared to -0.8%. On a yearly basis, retail sales increased 0.6%, just half of what analysts were expecting. Italian and French Service PMI came in at 50.8 and 48.3, both above expectations. German Services PMI came as a disappointment at 54.4.

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