Gold Prices Higher Following Weaker-Than-Expected ADP Employment Growth
(Kitco News) - Gold prices are holding on to modest gains despite weaker-than-expected private sector employment growth, according to the latest data from payrolls processing firm ADP.
Thursday, ADP said that 177,000 jobs were created in June. The report missed estimates as consensus forecasts were looking for gains of 190,000 jobs.
Gold was seeing positive gains ahead of the report, and is holding steady with modest gains in initial reaction. August gold futures last traded at $1,256.10 an ounce, up 0.21% on the day.
The latest ADP report increases the risk of disappointing employment data tomorrow. But many economists have shrugged off the data, noting that the private-sector report is not a consistent predictor of Friday’s official government numbers.
Economists have also said that U.S. economic data is currently taking a backseat to growing geopolitical friction. Friday the U.S. government is expected to levy $34 billion in tariffs on imported Chinese goods. The Chinese government said that it would respond in kind, in an escalation of the global trade war.
Andrew Hunter, U.S. economist at Capital Economics, said that while the ADP adds some downward pressure to Friday’s employment data, investors need to look at the bigger picture.
“With the survey evidence, including the Markit employment indices, also suggesting that hiring slowed a little last month, the strong 223,000 gain in non-farm payrolls in May looks unlikely to be repeated, so don’t expect another early morning tweet from the President tomorrow,” he said. “Nonetheless, the big picture is that labour market conditions are still unusually strong, and we expect that to keep the Fed on track to raise interest rates twice more by the end of the year.”