ADP Payrolls unexpectedly strong! Gold and silver rise against the trend, US dollar and US bonds diverge, many volatile signals overlap before NFP.

Often lauded by the market as "mini- Nonfarm " ADP employment data, unexpectedly beat analyst expectations, providing gold and silver with moderate support, although the US dollar also strengthened as a result, US Treasury yields softened and fell. Gold prices rose to around $1763.67, while silver reached $22.65. Ahead of the release of the key US nonfarm payrolls report on Friday, the market saw significant volatility, indicating overlapping ambiguous signals and a investment community moving forward with skepticism.

The US released September's "mini-nonfarm" ADP employment data, showing 568,000 new jobs in September and 340,000 in August, indicating robust job growth. This exceeded the 425,000 expected by economists surveyed by the Wall Street Journal, and was the highest increase since June this year, clearly showing that businesses are gradually recovering from the impact of the Delta variant of COVID-19.

The US Senate postponed a vote scheduled for Wednesday on a bill to suspend the debt ceiling. Senate Minority Leader McConnell softened his stance, saying he would support extending the debt ceiling to December to allow for a more permanent solution by the end of the year. US President Biden met with top business executives, emphasizing the dire consequences of not raising the debt ceiling, criticizing Republican senators as "not only hypocritical, but dangerously shameful." US Secretary of Defense Lloyd Austin warned that a US government debt default would undermine the economic strength on which national security depends.

Jake Sullivan, National Security Advisor to the Biden administration, met with Yang Jiechi, China's top diplomat, in Switzerland. The talks lasted six hours, covering issues related to human rights, Xinjiang, Hong Kong, the South China Sea, and Taiwan, but disagreements remained on the "US-China competitive relationship." Both sides agreed to take action to implement the spirit of the September 10 phone call between the two heads of state and strengthen strategic communication. External reports suggest that the Swiss talks paved the way for a "Biden-Xi meeting." On Wednesday, US officials revealed that the two countries had agreed in principle to a virtual bilateral meeting between US President Biden and Chinese President Xi Jinping before the end of the year.

Jeff Wright, chief investment officer of Wolfpack Capital, said the mini-nonfarm payrolls report reversed the slight upward trend in US Treasury yields. He also said the market is more focused on the nonfarm payrolls report to be released by the Labor Department on Friday, the more meaningful increase in employment, and the decline in continuing jobless claims, which could trigger the Federal Reserve to begin reducing its bond purchases in late October or November. But he explained: "Without a meaningful change in events or safe-haven buying, the market outlook for gold is bearish."

Naeem Aslam, chief market analyst at AvaTrade, said that as long as the report data is reasonably good, the Federal Reserve will continue to gradually unwind its quantitative easing program. Although inflation is rising, and gold is considered a hedge against rising consumer prices, the Federal Reserve's reduction in stimulus and interest rate hikes will increase the opportunity cost of holding gold and push down its price.

The US 10-year Treasury yield hit a high of 1.57% in overnight Asian trading , but fell to 1.507% during Wednesday's gold trading hours. The 30-year US Treasury yield also fell from 2.097% the previous day to 2.081%. The decline in US Treasury yields reduces the opportunity cost of holding gold, increasing investor interest in buying non-interest-bearing gold. A rise in the US dollar increases the cost for overseas buyers to purchase dollar-denominated commodities, reducing their buying interest.

FXEmpire analyst David Becker noted that silver prices fell slightly and ended at their intraday low. The US dollar gained traction and rose sharply, putting pressure on silver prices. Gold prices were actually higher, which helped silver to move against the trend. The stronger-than-expected US ADP private employment report led to higher short-term US Treasury yields and a rise in the US dollar.

Speaking on the technical aspects of silver, Becker said resistance is near the 50-day moving average of $23.60, and support is near the 10-year moving average of $22.41. Short-term momentum is positive, as the fast stochastic indicator recently generated a buy signal. Medium-term momentum has turned positive, as the MACD indicator generated a buy signal. The MACD histogram is printing in positive territory, and the upward sloping trajectory points to higher prices.

Another analyst, Christopher Lewis, said that the market continues to see a lot of volatility, which is typical for the entire silver market. After all, it is not only a precious metal, but also an industrial metal. In other words, there is a lot of disagreement when it comes to this market, and people are trying to figure out whether there will be a grand "reopening" in the future, or whether the market will slow down. In this case, the market may see a lot of doubt, and of course the $23 resistance level, which silver has seen many failures before.

Lewis added: "The 50-day moving average is now at $23.62 and is falling. At this point, I think it's only a matter of time before we see a complete collapse. That being said, if we are to break through the 50-day moving average, then we may move towards the 200-day moving average, but we need to see the US dollar fall."

From a technical perspective, Karen Jones, head of FICC technical analysis research at Commerzbank, observed further upside potential for precious metals, saying: "Silver has sold off to test its long-term key support at $21.87 to $21.17, which has held so far. These represent the lows of September and November 2020, and the highs of July 2014 and 2016, which are considered a major support band, and we expect them to be the bottom of the market."