Gold price continues to test resistance around $1,950 after ADP says 106k private sector jobs created in January
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(Kitco News) - The gold market remains in a solid uptrend, testing resistance just below $1,950 an ounce as the private sector labor market hired fewer workers in January, according to the latest data from payrolls processing company ADP.
Wednesday, ADP said that 106,000 jobs were created last month. The data significantly missed expectations as Economists were looking for job gains of around 176,000.
"In January, we saw the impact of weather-related disruptions on employment during our reference week. Hiring was stronger during other weeks of the month, in line with the strength we saw late last year," Nela Richardson, chief economist at ADP, said in the report.
The gold market is not seeing much reaction to the disappointing headline economic data as it trades in neutral territory. April gold futures last traded at $1,948.10 an ounce, up 0.14% on the day.
Although the employment data was weaker than expected, some analysts have said that investors and traders are hesitant to take any major position in gold today as markets await the Federal Reserve monetary policy decision. Markets expected the U.S. central bank to raise interest rates by 25 basis points this afternoon; however, the central bank could still strike a hawkish tone as it slows the pace of its aggressive rate hikes.
Some analysts have noted that the weaker-than-expected employment data could give the Federal Reserve some room to soften its aggressive stance. The Fed has said it is looking for signs of a cooling labor market before it looks to end its current tightening cycle.
Along with slowing momentum in the labor market, ADP said that wages appear to be holding steady. The report said that wages for people who stayed in their jobs increased 7.3%, unchanged from December. The report added that the information sector saw a significant drop, with wages growing 6.6%, down from December's increase of 7%. However, for workers who switched jobs, wages increased 15.4%, ADP said.
While ADP has described January's weakness as weather-related, Paul Ashworth, chief North America economist at Capital Economics, said it could be the start of a bigger trend in the labor market.
"On balance, we are skeptical this slowdown is primarily a temporary weather-related issue. Added to the weakness in activity, and the downturn in some forward-looking employment indicators like temporary employment and hours worked, it suggests that the easing in labor market conditions is gathering momentum," he said.