(Kitco News) - The gold market is holding its own even as the labor market appears to remain fairly resilient, as the private sector created more jobs than expected in October.
On Wednesday, ADP announced that 42,000 jobs were created last month. The report was better than expected, as consensus forecasts called for job gains of 32,000.
“Private employers added jobs in October for the first time since July, but hiring was modest relative to what we reported earlier this year. Meanwhile, pay growth has been largely flat for more than a year, indicating that shifts in supply and demand are balanced,” said Dr. Nela Richardson, Chief Economist at ADP.
The gold market is holding on to healthy gains following the stronger-than-expected employment data. However, the yellow metal still has a long way to go as prices remain stuck below $4,000 an ounce. Spot gold last traded at $3,971.20 an ounce, up 1% on the day.
The U.S. economy continues to create jobs, albeit at a slower pace than the start of the year and gains are seen in only a few sectors. The report said that education and health care, and trade, transportation, and utilities led the growth. For the third straight month, employers shed jobs in professional business services, information, and leisure and hospitality.
Although gold is attracting some bargain hunters as it holds initial support above $3,900 and ounce, some analysts have said that gold could struggle as the limited employment data supports comments from Federal Reserve Chair Jerome Powell, that a December rate cut was not a foregone conclusion.
Through most of the year, the Federal Reserve has been reluctant to cut interest rates as inflation pressures remain elevated and the labor market remains relatively healthy.
Although U.S. private-sector employment data rebounded last month, Jeffrey Roach, Chief Economist at LPL Financial, noted that ADP data can be fairly volatile.
“In more recent years, the relationship between ADP and BLS has improved but both series can be choppy. Averaging away some of the choppiness, both sources give warning signals that the job market is drying up. The Federal Reserve will likely focus on the weakening labor market as they continue the rate-cutting cycle,” he said.
