Gold price falls as ADP says private sector lost 2.76 million jobs, beating expectation
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(Kitco News) - Gold prices continue to struggle to find momentum as the private sector continued to shed jobs but at a much slower pace than expected according to private payrolls processor ADP.
Wednesday, ADP said that 2.76 million jobs were lost in May, which was much better than expected with expectations; consensus forecasts were calling for job losses of around 9 million. In its revised data, ADP said that nearly20 million people lost their jobs in April as the U.S. economy shuttered to a halt due to the COVID-19 pandemic.
The gold market was trading in negative territory ahead of the data and has pushed lower in initial reaction to the labor market data. August gold futures last traded at $1,724.10 an ounce, down 0.5% on the day.
Andrew Grantham, senior economist at CIBC, said the better-than-expected employment data comes as the U.S. starts to ease lockdown restrictions that were put in place mid-March to slow the spread of the coronavirus.
According to some economists, the latest employment data does provide some optimism ahead of Friday's official nonfarm payrolls report. However, they have also cautioned that the ADP numbers are not always a consistent predictor of the government estimates. According to consensus estimates, economists are expecting Friday's employment data to show job losses of around 8 million.
"There are methodology differences between the ADP and payrolls survey which mean Friday's figures may not wholly mirror those released today," Grantham said. "Today's print places some upside risk not just on the consensus forecast for non-farm payrolls on Friday (currently -8m) but also our less pessimistic -6m forecast."