The Daily Market Report: Gold Consolidates, Awaiting Fresh Directional Cues

02-Sep (USAGOLD) — Gold remains generally consolidative, paring recent gains, as the market awaits fresh directional cues. The ECB announces monetary policy Thursday and U.S. jobs data come out on Friday, ahead of the long Labor Day weekend.

The ECB is widely expected to maintain and possibly even intensify their dovish bent tomorrow. Six-months after initiating QE, the eurozone continues to struggle with tepid growth and disinflationary pressures.

In recent months, ECB President Draghi has extolled the virtues of QE and said that the €1.1 trillion program should be fully implemented. Interesting that inflation expectations eroded fairly dramatically since early July. Now, Draghi is expected to announce an expansion of the program.

If this is confirmed, it will make it harder for the Fed to initiate any tightening campaign; given that much of the rest of the world is still headed pretty definitively in the exact opposite direction. Nonetheless, the policy hawks will continue to hold-out hope for a solid U.S. employment report on Friday as evidence that there is the need for a rate hike.

The ADP employment survey for August came out softer than expected at +190k private payrolls, and revised July lower to +177k, from +185k previously. This sets up some potential downside risk for nonfarm payrolls, which have been trending lower since early this year.