(Kitco News) - Gold prices are holding recent gains above $4,000 an ounce but could face renewed selling pressure as the U.S. labor market remains relatively healthy, with the economy creating more private-sector jobs than expected.
ADP said Wednesday that 86,000 jobs were created in October, down from 90,000 jobs created in September. However, the data significantly beat expectations, as consensus estimates had forecast a gain of 67,000 jobs.
The report noted that the labor market has shown solid growth for a second consecutive month, while pay gains have remained steady.
"Employers of all sizes were hiring last month, and our data suggests that job-changers were lured by a combination of bonuses, overtime, and more hours in addition to higher base pay. Taken together, earnings growth for these workers hit its fastest pace since March 2024," said Dr. Nela Richardson, Chief Economist at ADP, in the report.
The gold market appears to be taking the positive labor market data in stride. Spot gold last traded at $4,037.70 an ounce, up more than 2% on the day. Gold prices pushed back above $4,000 an ounce overnight as the results of the U.S. midterm elections showed the Democratic Party sweeping back into power and taking control of Congress.
While the U.S. labor market remains on solid footing, some analysts have said that Tuesday’s election could potentially change the economic landscape. Analysts have said that gridlock between President Donald Trump’s administration and Congress is expected to keep the nation’s rising debt on its unsustainable path higher. At the same time, there are expectations that Democrats in power could limit the AI revolution and data center buildout.
However, the latest ADP numbers create more near-term pressure on gold, even as long-term sentiment remains bullish.
Artem Bakushev, Head of Risk at Monaxa, said that the ADP data reinforces expectations that the Federal Reserve still has room to raise interest rates, providing further support for the U.S. dollar and creating a headwind for gold.
“Private hiring came in comfortably ahead of what traders had pencilled in, even if it cooled a touch from last month’s pace, which is exactly the kind of steady, unspectacular strength that keeps a central bank on the fence,” he said.
“The dollar is the early beneficiary, Treasury yields are edging higher as traders pare back how quickly the Fed can loosen, and equity futures are weighing the comfort of a sturdy economy against the discomfort of tighter policy for longer. Gold sits in the squeeze, with firmer yields and a better-bid dollar weighing on bullion even as dip-buyers keep a floor beneath it, while any progress on an Iran deal that drags oil and inflation fears lower remains the one force capable of cushioning the blow.”
