Gold price trades below $1,820 as U.S. private payrolls surprise on the upside in February

Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!

(Kitco News) Gold edged down after private-payrolls processor ADP reported a better-than-expected increase in jobs last month. Federal Reserve Chair Jerome Powell's comments from Tuesday's testimony still weighed on the precious metal.

Private payrolls rose by 242,000 in February, ADP said on Wednesday. Market consensus was calling for an advance of 200,000 after January’s data saw an increase of 119,000 jobs.

“We're seeing robust hiring, which is good for the economy and workers, but pay growth remains quite elevated. The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near-term,” said Nela Richardson, chief economist at ADP.

Looking at the components of the report, most of the job increases were reported in the service-providing industries. The service sector added 190,000 positions. The biggest gain was within the leisure and hospitality sector, with 83,000 positions added. This was followed by the financial activities sector, which added 62,000 positions. Also, the education and health services sector saw 35,000 additional positions. The professional-business services sector lost 36,000 jobs.

The goods-producing sector also reported some gains in February, with an increase of 52,000 payrolls, led by manufacturing.

The biggest job gains were within the large companies. Small companies that employ up to 50 people reported losses of 61,000 positions. Midsized companies that employ up to 500 people saw an increase of 148,000. And large companies that employ 500 or more people saw gains of 160,000 positions.

In reaction to the data, gold ticked down, with April Comex gold futures last trading at $1,816.90, down 0.17% on the day. 

All eyes are now on the U.S. nonfarm payrolls number from February, which is scheduled to be released Friday. A stronger-than-expected data will weigh on gold, boosting Powell’s hawkish message of higher and quicker rate hikes from Tuesday. Market consensus calls are projecting for the U.S. economy to have added 203,000 positions last month, with the unemployment rate remaining at 3.4%.