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The gold market is under some light selling pressure in early action Wednesday. The yellow metal has remained lower despite the ADP jobs figures coming in lower-than-expected. The ADP employment data showed a rise of just 132,000 jobs in August. Estimates were looking for an addition of 300,000 jobs.

Although some analysts may use the ADP data as an estimate of non-farm payrolls figures due Friday, the ADP data has never been much of a predictor. ADP has been on hiatus to revamp its methodology. The company now seeks to outline its own views of the economy rather than being an estimate of non-farm payrolls figures. Despite the miss in the data, gold showed little to no reaction.

The gold market is moving further away from the $1750 level as the bears gather some steam. The major test, however, would be at the $1700 level. If able to produce a close below this level, the bears could force more longs to exit the market and a fresh wave of sellers to enter it. This could, in turn, drive the price of gold sharply lower before it finds more stable footing.

The bigger jobs report will be released Friday and could be market-moving. If the non-farm payrolls figures also miss expectations by a wide margin, it could give the Fed much to consider in the weeks until the next FOMC meeting next month. If the data is in line or better than expected, however, it would almost certainly cement an aggressive rate hike from the central bank next month. Given some recent commentary from Fed Chairman Powell, it does not seem likely that the Fed will start to pivot away from fighting inflation anytime

soon. In fact, the Fed may now continue hiking rates aggressively until the end of the year, possibly putting key rates at or above the 4% level by year’s end.

Should the Fed maintain its aggressive policy stance, stocks and risk assets could eventually come under increasing pressure. If stocks do roll over again, gold could possibly see some of that capital coming into the market in the months ahead. The question may become, however, at what point does the opportunity cost begin to weigh on gold.

With rates around the 4% level at the end of the year, it seems unlikely any investors would be scared away from gold. Depending on what the Fed decides to do next year, however, that could change. The Fed may also not desire to hold rates at elevated levels for any longer than it has to to get inflation under control. Once it has accomplished that task, the Fed could then look to begin easing once again and gold could see significant buying once the threat of higher rates is removed. For the time being, the market may remain mostly sideways and maintain a range until more clarity is provided by the Fed.