The spot gold price was mostly unchanged on Wednesday morning, trading roughly 0.1% lower at $1,310/oz. The dollar was slightly higher at 96.1 on the DXY index, its highest in about three weeks. Meanwhile, silver prices were 0.5% higher (+10¢) to $18.75/oz.
The markets were influenced the most by this morning’s release of the ADP private payrolls report for August that showed 177,000 new jobs were added to the private sector during August. This was above consensus expectations.
In addition, the private payroll numbers for July were revised higher from 179,000 to 194,000. The next big data point will be Friday’s release of the non-farm payrolls (NFP) report. Analysts are expecting the NFP employment to rise to 180,000, pulling the headline unemployment rate down to 4.8%.
While the precious metals were largely flat, Wall St opened about a quarter percent (0.25%) in the red this morning. The equities market still seems to be digesting the somewhat hawkish outlook of the Federal Reserve Open Market Committee (FOMC) at last week’s meeting at Jackson Hole. Today is also the final trading day of the month of August, meaning there will likely be a bit more volatility as various monthly contracts expire.
Crude oil prices were down nearly 1% on Wednesday, continuing their decline after recently threatening to breach the $50 per barrel level. Although Saudi Arabia has publicly promised it will not flood the global markets with oil (a move that would send prices even lower), there are also indications that new exploration and discoveries for crude oil deposits have plunged to a seven-decade low. This would indicate that as oil producers draw down their inventories and the current supply glut eases, the world markets could actually be looking at a supply shortfall in the future. Depending upon the future demand for oil amid other emerging energy technologies, this could have a huge impact on the crude oil trade.
Moreover, the markets in the U.K. are still deferring the effects of Brexit. The calm at the moment—the British pound sterling has stabilized above $1.30 and other economic indicators have been upbeat of late—is obscuring the fact that the major ramifications of the Leave vote have yet to be borne out. Nonetheless, sterling is still well below where it traded prior to the vote. Moreover, the rest of the country’s economy is not in an advantageous position considering it will no longer give foreign investors access to the single market in Europe once the dust clears on Brexit.
Not far off, in Ireland, the big story is the European Commission’s decision to hold Apple (AAPL) accountable for back taxes that it never paid for headquartering its operations in Ireland (which is a member of the EU). The EC says that Apple owes €13 billion ($14.5 billion), but Ireland doesn’t want the tax money. It has cultivated a reputation for being very tax-friendly to multinational corporations, and doesn’t want to jeopardize that role.
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