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Gold price drops to fresh daily lows as U.S. private payrolls surprise on the upside in December

Kitco Media
By Anna Golubova
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(Kitco News) Gold fell after private-payrolls processor ADP reported a better-than-expected increase in jobs in December.

Private payrolls rose by 235,000 last month, ADP said on Thursday. Market consensus calls were projecting an advance of 150,000 after November’s data saw an increase of 127,000 jobs.

Looking at the components of the report, most of the job increases were reported in the consumer-facing service industries. The service sector added 213,000 positions. The biggest gain was within leisure and hospitality, with 123,000 positions added. This was followed by the professional/business services sector, which added 52,000 positions. Also, the education and health services sector saw 42,000 additional positions gained. The trade, transportation and utilities sector lost 24,000 jobs.

The goods-producing sector saw slight gains in December, with an overall increase of 22,000 in payrolls, led by the construction sector.

The biggest job gains were within the small and medium companies. Small companies that employ up to 50 people reported 195,000 new jobs. Midsized companies that employ up to 500 people saw an increase of 191,000. In contrast, large companies that employ 500 or more people saw a loss of 151,000 positions.

“The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size,” said Nela Richardson, chief economist at ADP. “Business segments that hired aggressively in the first half of 2022 have slowed hiring and in some cases cut jobs in the last month of the year.”

In reaction to the data, gold declined and dropped to fresh daily lows, with February Comex gold last seen at $1,847.68, down 0.60% on the day.  

All eyes are now on the U.S. nonfarm payrolls number from December, 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 $1,850 an ounce.

Market consensus calls are estimating the U.S. economy to have added 200,000 positions last month and for the unemployment rate to remain at 3.7%.

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Anna Golubova

Anna Golubova is the Producer for Kitco News. With more than ten years of experience in media, she has covered a range of topics, focusing on economy and politics. Anna began to exclusively cover economic news in 2013, attending media lockups at the Bank of Canada and Statistics Canada to report on a range of key macro economic events, including interest rate announcements, GDP, unemployment, and retail. She holds a Master of Arts in International Relations from NPSIA, Carleton and a Bachelor's degree in Political Science and History from the University of Ottawa.

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