Head Trader Daily Commentary 06/04/2017

Good morning everyone,
 
A subdued session in the Far East yesterday and during European trading saw gold drift lower as Chinese investors returned to their desks and were on the offer for much of the day.
 
A strong ADP jobs report from the US drove the U.S. dollar index and stock markets higher, weighing further upon metal values. The U.S. ADP national employment report (March) showed a higher than expected rise of 263K jobs vs 180K expected.
 
US equity market and US Dollar Index gains were swiftly reversed however, on the back of the release of the latest FOMC minutes which showed disagreement amongst Fed officials over the desired pace of inflationary rises, as well as dealing with the economic impact of President Trump's stimulus proposals.
 
Additionally, bond prices climbed and yields fell after the Fed minutes disclosed that it had discussed reducing its bond holdings. $4.5 trillion in assets sit on the Fed’s balance sheet after the huge round of buying during the financial crisis but the minutes suggest the Fed may now stop buying new bonds and letting its current holdings mature.
 
The result of all of this was gold rebounding off the canvas to pare the entirety of its losses for the day and finish back at the day’s highs near AUD 1660.00
 
While all of this was transpiring, silver barely budged - likely evidence of ratio play.
 
Investors turn their sights now to the meetings between U.S. President Trump and Chinese leader Xi Jinping on Thursday and Friday. The monthly lottery that is US Non-Farm Payrolls will also take place on Friday morning at 08:30 ET.
 
Technically the focus remains the 200 Day moving average (in both AUD and USD Gold terms) and gold’s success or failure at that level, which would give greater confidence surrounding the direction of the metal’s next sustained move.
 
Kind regards,
Andre