(Kitco News) - Gold prices are trading near session highs and could gain further bullish momentum as the U.S. labor market slows, following weaker-than-expected private sector growth in December, according to payroll processor ADP.
ADP reported on Wednesday that 122,000 jobs were created last month, missing expectations, as consensus forecasts had anticipated job gains of 139,000.
“The labor market downshifted to a more modest pace of growth in the final month of 2024, with a slowdown in both hiring and pay gains,” said Nela Richardson, chief economist at ADP. “Health care stood out in the second half of the year, creating more jobs than any other sector.”
Gold has been experiencing solid momentum ahead of the North American session, though it has not shown significant new movement in reaction to the disappointing labor market data. Spot gold last traded at $2,655.70 an ounce, up 0.28% on the day.
In addition to slowing employment growth, the ADP report highlighted that wage growth continues to weaken. Over the past 12 months, wages increased by 4.6%, marking the slowest pace of gains since July 2021. Meanwhile, wages for job changers rose by 7.1%, a slight decline from November.
Commodity analysts are watching the labor market closely as the Federal Reserve has signaled that it is a key factor in its monetary policy decision. Although inflation remains stubbornly elevated, weak job growth could force them to cut rates more than expected this year.
Some economists note that weak wage growth reduces some inflation pressures and could give the Federal Reserve a little wiggle room in its monetary policy.
