Make Kitco Your Homepage

Gold price falls as ADP says private sector lost 2.76 million jobs, beating expectation

Kitco News

Editor's Note: Sign up for the International Precious Metals Institute's (IPMI) LIVE WEBINAR. A panel discussion on current issues facing the autocatalyst segment of the precious metals industry, including procurement, financing manufacturing, recycling and refining. Click HERE to register for FREE.

(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."

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.