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ADP Miss and Service Sector Contraction Trigger Safe-Haven Demand
Gold prices surged 0.6% to $3,371.66/oz Wednesday after disappointing U.S. economic data, with the “small payrolls” report showing just 37,000 private sector jobs added in May – the weakest reading in over two years and significantly below the 110,000 consensus estimate.
Key Market Drivers
| Indicator | Actual | Expectation | Impact |
|---|---|---|---|
| ADP Employment | 37K | 110K | Highly Bearish USD |
| ISM Non-Manufacturing PMI | 49.9 | 52.0 | Contraction Signal |
| Services Inflation | 68.7 | 65.1 prev. | Stagflation Concern |
Technical Analysis
- Daily Chart:
- Bullish MA alignment (5/20/50 EMA)
- Support at $3,346 held firm
- Resistance: $3,384 (June 4 high)
- 4-Hour Frame:
- Higher lows pattern established
- RSI at 58 (room for upside)
Geopolitical Context
Escalating tensions provided additional support:
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- Iran nuclear talks at impasse over sanctions relief
- Putin-Trump call highlighted Ukraine conflict risks
- Market sensitivity to Middle East developments
Trading Strategy
| Position | Entry | Stop | Target |
|---|---|---|---|
| Long (Aggressive) | $3,352 | $3,347 | $3,368+ |
| Long (Conservative) | $3,328 | $3,323 | $3,340+ |
| Short (Resistance) | $3,400 | $3,405 | $3,385- |
Critical Events Ahead
-
- 20:15 GMT: ECB Rate Decision
- 20:30 GMT: US Trade Balance/Jobless Claims
- Fed Speeches: Kugler (00:00), Harker/Schmid (01:30)
The combination of softening labor data, service sector contraction, and persistent inflation creates a “bad news is good news” dynamic for gold, as traders increasingly price in Fed easing. Technicals suggest the path of least resistance remains higher, though $3,400 presents psychological resistance.
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