Direxion Shares Exchange Traded Fund Trust still have some rough days ahead based on analysts’ views on the general market direction. The market has been trading in cautious mode with serious leaning towards the bearish side based on less than impressive economic data. The Chicago PMI that was released yesterday was in negative zone at 48.7 from 54.4. You should note that a reading below 50 in the PMI signals a contraction in the economy.
The Wall Street Journal reports that gold prices are lower on Europe today as strong U.S. jobs data suggests that the Fed will raise interest rates before the end of the year. It was reported that Spot gold was down 0.1% at $1,112.94 after it had earlier dropped to a two-week low of $1,111.29 per ounce. An ANZ Research confirms the downtrend in the bullion by saying, “Gold prices came under pressure with [the] upbeat U.S. economic data”.
Strong data pressures Gold
The U.S. private employers’ jobs report that ADP posted yesterday is already causing downward pressure on the price of the bullion. The ADP reports that U.S. private employers added 200,000 jobs in Sept., to beat the weak analysts’ estimates. The ADP data suggests that the BLS jobs report that will be released tomorrow will beat the estimates. If the jobs reports show strong hiring trends, the fed might be encouraged to hasten its move to raise the interest rates.
A number of economic data are due to be released today and analysts seem to think that a positive showing would further weaken the price of the yellow metal. The U.S. Manufacturing PMI and the ISM Manufacturing data are due today. More so, the Initial Jobless claims report is due in the next 21 hours. Traders of the Direxion Shares Exchange Traded Fund Trust are likely to be a bit cautious today U.S. traders await data before they place their bets on the bullion.
The fed has hinted that the decision about the raising of interest rates is data-driven. However, the decision of the Fed to wait on data before raising interest rates should have lifted the bullion. Analysts at RBC Capital Markets note, “the gold price has stayed fairly supported at this level as a more dovish sentiment by the Fed has curtailed expectations of a hike before the end of the year, and now sits at 42% versus 60% at the beginning of September.”
China is staying on the sidelines for a week
There has been fears that a slowdown in the Chinese economy could force the Direxion Shares Exchange Traded Fund Trust to fall lower. However, it appears that the Chinese are actually buying more gold ahead of the festive season – at least, based on export data from Hong Kong into mainland China. Nonetheless, China is stepping out and staying on the sidelines as it embarks on a one-week “Golden Week” holiday.