(Kitco News) - The gold market is once again above $2,400 an ounce but is struggling to attract more interest, even as momentum in the U.S. labor market slows sharply, with the economy creating fewer private sector jobs than expected in July.
On Wednesday, ADP reported that 122,000 jobs were created this past month, missing expectations as consensus forecasts predicted job growth of around 147,000.
At the same time, wage growth is also starting to slow, easing inflation fears.
“With wage growth abating, the labor market is aligning with the Federal Reserve's effort to slow inflation,” said Nela Richardson, chief economist at ADP. “If inflation rises again, it won't be because of labor.”
Paul Ashworth, Chief North America Economist at Capital Economics, said there is a risk that the rebalancing in the labor market is going too far.
The gold market, while holding gains, is not seeing a lot of new momentum. August gold futures last traded at $2,417.20 an ounce, up 0.51% on the day.
Regarding wage growth, the report stated that for workers who stayed in their jobs, wages increased by 4.8%. This is “the slowest pace of growth in three years,” according to the report.
For workers who changed jobs last month, their wages increased by 7.2%, down sharply from 7.8% reported in June.
According to economists, the latest private sector employment numbers continue to support expectations for the Federal Reserve to cut interest rates in September. However, the market is not seeing much of a reaction because this rate cut is already fully priced in.
In a sector-by-sector breakdown, the report noted broad-based weakness in hiring.
Goods-producing sectors created 37,000 jobs in July, with the construction industry creating 39,000 new positions. The mining sector hired 2,000 new employees; however, 4,000 jobs were lost in the manufacturing sector.
Meanwhile, service-sector industries created 85,000 jobs in July. The professional and business service sector saw the biggest declines, with job losses of 37,000. At the same time, the IT sector lost 18,000 jobs. The trade, transportation, and utility sector saw the biggest gains, with 61,000 jobs created in July. Financial services created 14,000 jobs; educational and health services created 22,000 jobs this past month; leisure and hospitality created 24,000; and other service sector jobs created 19,000.
