(Kitco News) – Gold prices are off their session lows, and is seeing a little momentum as the U.S. labor market improves at a slower pace than expected, according to the latest data from private payrolls processor ADP.
Wednesday, ADP said that 428,000 jobs were created in August. The data was significantly weaker than expected as consensus forecasts were calling for gains of 1.25 million.
Gold prices have been under significant pressure as optimism grows that the U.S. economy is recovering better than initially expected after it was devastated by the COVID-19 pandemic. December gold futures last traded at $1,970 an ounce, down 0.45%.
While the employment data is slowly improving, economists have noted that the labor market is still significantly weaker in the aftermath of the COVID-19 pandemic. Since March more than 58 million people have filed for unemployment benefits.
Some economists have noted that the latest private sectors data provides some downside risks ahead of Friday’s non-farm payrolls report. However, they also note that ADP is not a consistent predictor of the government’s official numbers.
“The average divergence since March between the ADP survey and private payrolls on first release has been large, at just over 2 million, with a narrowest spread of 680K in April,” said Andrew Grantham, senior economist at CIBC.
“As such, anything is still possible as we head into Friday’s payrolls. Our below-consensus call of 800K for Friday is based mainly on the flattening trend of high-frequency employment indicators and mobility, rather than today’s weaker than expected ADP figure,” he added.
Author: Neils Christensen