Gold Prices Whipsawed Forming a Doji Day Following Robust ADP Payroll Report

Gold prices whipsawed and opened where it closed creating a doji day which shows indecision. Prices were initially buoyed by concerns over a trade war between the U.S. and China. Stronger than expected EU inflation offset robust private payrolls data which kept gold prices unchanged.  Support is seen near the 50-day moving average at 1,311, while resistance is seen near  the 10-day moving average at 1,336.

Eurozone unemployment rate fell back

Eurozone unemployment rate fell back to 8.5%, from 8.6% in the previous month. The dip was in line with expectations and overall jobless numbers are now at the lowest level since early 2009. Cross country differences remain very high, and disappointingly youth unemployment held steady at a much higher 17.7%, with rates ranging from just 6.2% in Germany to 35.5% in Spain. Part of the Eurozone’s problem is that even among the younger generation there is not great willingness to move countries, with language barriers and qualification issues underpinning low labor mobility.

Eurozone March HICP inflation accelerated

Eurozone March HICP inflation accelerated to 1.4% year over year, February was revised up to 1.2% year over year. The acceleration in the headline rate was in line with expectations and mainly due to a rebound in food inflation last month, which accelerated to 2.2% year over year, after falling back to 1.0% year over year in February. Base effects from the long and harsh winter as well as the earlier timing of Easter this year, underpinned the uptick and as we expected core inflation held steady for a third consecutive month at just 1.0%. This is still far below the ECB’s 2% target, but officials seem increasingly convinced that underlying inflation has now turned a corner and with PMI surveys still reporting that capacity shortages are curtailing the room for a further expansion in growth, the case for a phasing out of QE by the end of the year remains unchanged. Indeed, services price inflation actually accelerated to 1.5% year over year from 1.3% year over year although here the Easter effect will be more pronounced and the measure is likely to fall back again on Easter related base effects in April.

U.S. ADP reported private payrolls rose More than Expected

U.S. ADP reported private payrolls rose 241k in March, stronger than expected, following an upwardly revised 246k increase in February which was 235k. The goods producing sector added 65k workers, with an additional 176k going into services. In the goods producing area, construction added 31k and manufacturing increased 29k. Service sector employment included a 40k climb in the trade/transport area, with education 28k higher and a 26k gain in leisure. Medium sized firms added 127k workers. The data suggest some upside risk nonfarm payrolls in Friday’s BLS report.