(Kitco News) - The gold market continues to consolidate gains above $3,100 but could struggle to find new momentum, as the U.S. labor market remains on solid footing after private companies hired more workers than expected last month, according to private payrolls processor ADP.
ADP reported that 155,000 jobs were created in March, significantly beating expectations. Consensus forecasts had projected job gains of 118,000.
“Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors,” said Nela Richardson, chief economist at ADP.
The better-than-expected employment data is weighing on gold, as prices continue to fall from their overnight highs. Spot gold last traded at $3,116.50 an ounce, roughly unchanged on the day.
Ahead of the latest employment report, some analysts had warned that the gold market appeared a little overbought, and that solid economic data could prompt some profit-taking.
However, analysts also note that dips continue to be bought, as economic uncertainty remains elevated with President Donald Trump preparing to announce new global import tariffs Wednesday afternoon.
Although gold remains an attractive safe-haven asset, some analysts point out that the precious metal could be sensitive to the Federal Reserve’s monetary policy, as the central bank remains in no hurry to cut rates. The latest ADP employment numbers support the Fed’s current neutral stance.
The report also noted that wage inflation remains relatively muted. Workers who stayed in their jobs last month saw their annual wages increase by 4.6%, while those who changed jobs saw their wages rise by 6.5%.
“The pay premium for job-changers was 1.9 percentage points, matching a series low last seen in September,” the report said.
While the employment data is easing some concerns about the health of the U.S. economy, economists caution that the ADP number doesn’t provide a full picture of the labor market. Government layoffs are expected to impact and drag down Friday’s official nonfarm payrolls data.
