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Gold Falls, but Weak ADP Jobs Report Limits Losses

Investing.com -- Gold prices retreated from a four-week high on Wednesday after reports that stemmed some of the damage to risk appetite done by President Donald Trump's comments a day earlier on the trade outlook.

Even so, losses were kept in check by economic data hinting strongly at a further cooling of the U.S. economy under the strain of the trade war with China, laying the ground for more interest rate cuts by the Federal Reserve in the new year.

Payrolls processor ADP's monthly data showed private-sector job gains slowed sharply in November to a mere 67,000, barely half of what was forecast. In addition, the Institute of Supply Management's non-manufacturing survey also missed expectations, although it continued to show the U.S. service sector expanding.

By 11:30 AM ET (1630 GMT), gold futures for delivery on the Comex exchange had fallen 0.4% to $1,478.95 a troy ounce, down from an intraday high of $1489.85 that was their highest quote since early November. Spot gold was down 0.3% at $1,473.42.

Silver futures, as ever, proved more volatile, losing 2% to $16.91 an ounce, while platinum futures fell 1.0% to $904.00.

Despite the resilience in the short term, some analysts are arguing things will have to get worse for the yellow metal before they can get better.

"Even though the longer-term outlook looks solid, we expect substantial price weakness in the coming weeks and months," ABN AMRO (AS:ABNd) analyst Georgette Boele said in a research note.

Even after coming $100 off the year's highs, she noted, "investors are still massively positioned for higher gold prices. Net-long positioning in the futures markets are extreme, and ETF positioning is at a high. These positions currently hang over the market and prevent prices from moving substantially higher, because every uptick in prices is used to take profit on existing positions."

Boele argued that if the short-term support level of $1,450 is taken out, prices could easily fall another $50 per ounce.

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