Gold price unable to hold its ground following massive U.S. private sector employment growth
New York (Jun 3) The gold market is seeing some renewed selling pressure in delayed reaction as U.S. companies went on a hiring spree last month, according to private payrolls processor ADP.
Thursday, ADP said that 978,000 jobs were created this past month, significantly beat expectations; consensus forecasts were calling for job growth of around 645,000.
In initial reaction to the ADP data, the gold market managed to hold relatively steady. However, in delayed reaction, following more positive economic data, the precious metal has lost further ground. August gold futures last traded at $1,883.20 an ounce, down 1.40% on the day.
According to some economists and market analysts, the latest ADP numbers creates some significant upside potential for Friday’s official government employment data. Currently economists are expecting that the nonfarm payrolls report will show that 645,000 jobs were created last month.
“This is a very strong report despite the downward revision to April. The track record alongside non-farm payrolls is spotty but the trend is what's most important now and it's clearly improving at an accelerating pace,” said Adam Button, head of currency strategy at Forexlive.com.
Andrew Hunter, senior U.S. economist at Capital Economics said that the latest employment numbers from ADP indicate that labor market shortages are starting to work themselves out; however, he added that labor issues in the U.S. remain a risk for the economic recovery.
“The ADP report could be a sign that labour shortages are already starting to clear, as virus-related health fears and childcare responsibilities stemming from school closures start to fade,” he said. “Nevertheless, with the Fed’s latest Beige Bok suggesting the shortages remain a serious problem, and with other evidence including the PMI surveys indicating that the pace of hiring is still lagging well behind the resurgence in demand, we suspect employment growth will continue to disappoint over the next few months.”
Some market analysts have said that a disappointing employment report on Friday will continue to support gold prices as it will allow the Federal Reserve to maintain its ultra-loose monetary policies.
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