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(Kitco News) - The gold market is seeing some renewed selling pressure as the U.S. labor market continues to fire on all cylinders as private-sector job growth surged higher in June, according to the latest report from payroll processor ADP.
Thursday, ADP said that 497,000 jobs were created last month. The data significantly beat expectations as economists were looking for job gains of around 226,000.
Gold prices dropped solidly below initial resistance at $1,930 an ounce in initial reaction to the latest labor market data. August gold futures last traded at $1,917.20 an ounce, down 0.51% on the day.
The gold market is getting hit on multiple fronts as the solid labor market data eases fears that the U.S. economy is headed toward a sharp recession. At the same time, higher wages could force the Federal Reserve to maintain its aggressive monetary policies and raise interest rates higher.
Although wages have been declining, the report noted that they remain elevated. For workers who stayed in their jobs, wages increased 6.4% in the last 12 months, down slightly from the 6.6% seen in May. At the same time, people who changed jobs saw their annual salary increase by 11.2%, the slowest pace of growth since October 2021.
"Consumer-facing service industries had a strong June, aligning to push job creation higher than expected," said Nela Richardson, chief economist, ADP. "But wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge."
Looking at a breakdown of the labor market, the report said that the good-producing sectors saw job gains of 124,000. Natural resources and mining created 69,000 jobs last month; the construction sector hired 97,000 new workers; however, the manufacturing sector saw job losses of 42,000.
At the same time, the services sector saw growth of 373,000 jobs last month. The employment gains were led by the hospitality and leisure sector, which reported job growth of 232,000.
Trade/transportation and utilities created 90,000 jobs last month; the information sector lost 30,000 jobs, the financial sector saw job losses of 16,000, and professional services declined by 5,000 jobs. Education and health services created 74,000 jobs last month. Finally, "other services" saw job gains of 28,000.
