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Gold price moves up from daily lows as U.S. private payrolls surprise with a decline in December

Kitco News

(Kitco News) Gold climbed up from daily lows after private-payrolls processor ADP reported a decrease in jobs in December instead of expected growth.

Private payrolls declined 123,000 during the previous month, which marked the first decrease since April, ADP said on Wednesday. Market consensus was calling for an advance of 88,000. November’s data was downwardly revised to an increase of 304,000 jobs.

In an initial reaction to the data, gold ticked up from daily lows but remained in negative territory. February Comex gold futures were last trading at $1,940.40, down 0.72% on the day. 

Looking at the components of the report, most of job declines were reported in large companies that employ 500 or more people with 147,000 jobs lost. Small companies that employ up to 50 people were in the second spot with 13,000 jobs lost. Midsized companies that employ up to 500 people saw an increase of 37,000 jobs. 

The majority of payrolls lost were in the service-providing sector, which saw a decrease of 105,000 jobs in December. The goods-producing sector lost 18,000 payrolls. 

The December decline shows the negative impact from the second coronavirus wave that hit the U.S. at the end of the year, said CIBC World Markets economist Katherine Judge.

“That was much worse than the … gain expected by the consensus, and leaves the level of employment 7.6% below February's level. This print leans towards something worse than our below consensus -20K call for the total non-farm payrolls print on Friday,” Judge said.

Before the data release, gold was down more than 1% on the day on some profit-taking after climbing above $1,960 an ounce early Wednesday.

“Gold prices are lower … on some normal profit-taking from the shorter-term futures traders and some chart consolidation after gold hit a two-month high overnight. A surge in Bitcoin prices to another record high overnight may also be stealing some of the precious metals markets’ thunder at mid-week,” Kitco’s senior analyst Jim Wyckoff said.

Live 24 hours gold chart [Kitco Inc.]

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