Gold and silver are recovering from earlier losses, as haven-demand continues to offset anything positive on the economic front. As for the latter, focus is squarely on tomorrow’s U.S. employment report.
Today’s ADP survey came in much stronger than expected, creating some upside risk for May nonfarm payrolls. The data further bolstered expectations that the Fed will raise interest rates this month. Fed funds futures now put the probability at 95%.
However, construction spending was much weaker than expected in April, tumbling 1.4%. Consensus was for a rise of 0.5%. That is likely to have a negative impact on Q2 GDP expectations.
With both political and geopolitical risks still elevated, the metals seem reluctant to give-up recent gains. Silver’s intraday rebound was particularly impressive.
At one point in the session, silver was down 2% after being rejected from the critical 17.47/65 resistance zone. Silver ticked briefly below $17 and then began its recovery. At this juncture, silver is more than 30¢ off that intraday low. suggesting further tests of the aforementioned resistance area are likely.
Both gold and silver seem comfortable going into the jobs report with a bullish posture. Looming next week are the UK elections and then the FOMC meeting. And who knows what might happen in any of the global hot-spots at any given moment.