Gold Edges Higher After Weak ADP Jobs Data

Gold prices moved higher on Wednesday, recovering some ground after three straight sessions of declines. The metal found support from a softer-than-expected U.S. private payrolls report, which helped cool expectations for a near-term Federal Reserve rate increase as tensions between the United States and Iran intensified.

Labor data shifts rate expectations

Front-month Comex gold for October delivery rose $15, or 0.34%, to $4,377.80 an ounce. Silver also advanced, with the October contract gaining $0.186, or 0.29%, to $65.035 an ounce. The move came as investors weighed the effect of weaker labor-market data against broader geopolitical risk.

Automatic Data Processing said private employers added 38,000 jobs in August, the weakest reading since January and below market expectations of 47,000. July’s figure was revised up to 46,000. The report pointed to a broad slowdown in hiring, with large companies adding most of the jobs and smaller firms contributing only a modest increase.

What it means for gold

The payrolls miss pushed back expectations for a Fed hike at the central bank’s September meeting. Market pricing for a rate increase slipped to 64.20% from nearly 68.20% the previous day. Lower rate expectations tend to weigh on the dollar, which can make gold more attractive for overseas buyers and support prices.

The dollar channel mattered here because gold is priced in U.S. currency and typically moves inversely to it. When the dollar softens, buyers using other currencies face a lower effective cost, while a stronger dollar usually acts as a headwind for bullion. In this case, the ADP report helped offset pressure from the previous sessions and gave the metal a modest lift.

Traders are now focused on the U.S. nonfarm payrolls report due on September 4 for a broader reading on labor-market conditions. That release is likely to shape expectations for the Fed’s next move and determine whether gold can build on Wednesday’s rebound or remain range-bound near recent highs.

This article is not investment advice and recommends no asset, level or direction; a single session's move is not evidence of a trend. For background see Currency, Cross Rate, Currency Pair, and for terms the finance glossary.