Gold price at session lows just above $1,700 following weak U.S. ADP employment numbers
(Kitco News) - The gold market can’t catch a break as prices hold near session lows and just above critical support around $1,700 an ounce even as fewer workers than expected were hired in the private sector according to private payrolls processor ADP.
Wednesday, ADP said that 117,000 jobs were created in February, significantly missing expectations; consensus forecasts were calling for job growth of around 203,000.
The latest employment data is not having much impact on gold prices. April gold futures last traded at $1,707.8 an ounce, down nearly 1.5% on the day.
Although the gold market is not seeing much reaction to the latest employment data, markets analysts note that this should be bullish for the precious metal as it will continue to support the Federal Reserve’s ultra-accommodative monetary policies.
The latest data shows how the labor market continues to struggle as the U.S. economy continues to feel the effects of the COVID-19 pandemic.
“There's a big hole for the U.S. to climb out of and that's what the Fed is entirely focused on,” said Adam Button, chief currency strategist at Forexlive.com.
Paul Ashworth, chief U.S. economist at Capital Economics, said in a note to clients that the latest employment data is even more disappointing because states started to reopen their economies last month.
“The modest 117,000 gain in the ADP measure of private payrolls for February, down from an upwardly revised 195,000 increase the month before, is a disappointment given that the drop-off in coronavirus case numbers and the resulting lifting of containment measures should be giving the economy a bigger shot in the arm,” he said.
“The disappointing ADP figure presents a clear downside risk to our otherwise above-consensus estimate that non-farm payrolls increased by 500,000 last month. But, given the ADP's patchy correlation with the official employment data and the strength of the high frequency data, we are happy to stick with that estimate,” he added.