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Gold price weighs U.S. private payrolls number ahead of Friday's employment report

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(Kitco News) Gold edged down after private-payrolls processor ADP reported a slightly better-than-expected increase in jobs in September.

Private payrolls rose by 208,000 last month, ADP said on Wednesday. Market consensus calls were expecting an advance of 200,000. August’s data was upwardly revised to an increase of 185,000 jobs.

Gold was under pressure but did not see a strong reaction to the data, ticking slightly down. December Comex gold futures last trading at $1,719.60, down nearly 0.63% on the day.

Looking at the components of the report, most of the job increases were reported in the service-providing sector, which added 237,000 positions. The trade, transportation and utilities sector saw the biggest monthly gains, with 147,000 positions added. This was followed by the professional/business services sector, which added 57,000 positions. Also, the education/health services sector saw 38,000 additional positions, and the leisure and hospitality sector created 31,000 new jobs.

The goods-producing sector saw losses in September, with a decrease of 29,000 payrolls.

The biggest job gains were within the medium companies. Midsized companies that employ up to 500 people saw an increase of 90,000. Large companies that employ 500 or more people saw 60,000 new jobs added. And small companies that employ up to 50 people reported 58,000 jobs.

“We are continuing to see steady job gains,” said Nela Richardson, chief economist at ADP. “While job stayers saw a pay increase, annual pay growth for job changers in September is down from August.”

All eyes are now on the U.S. nonfarm payrolls number from September, which is scheduled to be released Friday. A stronger-than-expected data will weigh on gold, boosting hawkish Fed rate hike expectations, while any disappointment will help gold maintain its rally above $1,700 an ounce.

“Gold pushed back above USD1700/oz for the first time in nearly four weeks as sentiment continues to turn move bullish. The precious metal has been under pressure as tighter monetary policy and a stronger USD has weighed on investor demand. Further softening of the labour market will be required for this rally to continue,” said Daniel Hynes, senior commodity strategist at ANZ. “This places much importance on U.S. non-farm payrolls this week for any clues on the future path of central bank monetary policy.”

Market consensus calls estimate the U.S. economy added 250,000 positions last month.

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