(Kitco News) - The gold market is seeing renewed buying momentum as the U.S. labor market lost significant momentum last month, according to the latest data from private-sector payroll processor ADP.
Wednesday, ADP said that 103,000 jobs were created last month. The data significantly missed expectations as economists were looking for job gains of around 130,000. At the same time, October's employment data was revised lower to 106,000 jobs, down slightly from the initial estimate of 113,000.
"Restaurants and hotels were the biggest job creators during the post-pandemic recovery," said Nela Richardson, chief economist of ADP, in the report. "But that boost is behind us, and the return to trend in leisure and hospitality suggests the economy as a whole will see more moderate hiring and wage growth in 2024."
The disappointing economic data is helping to support gold prices after Monday's significant blow-off top rally that saw prices drop sharply after hitting all-time highs above $2,100 an ounce. February gold futures last traded at $2,048.40 an ounce, up 0.59% on the day.
According to some analysts, gold is benefiting as the latest employment data fits the growing expectations that a slowing economy and cooling labor market will force the Federal Reserve to cut interest rates sooner rather than later. Markets see a roughly 60% chance that the Federal Reserve will cut rates in March.
At the same time, wages continue to cool, easing inflation pressures.
The report said that wages for workers who stayed in their current position rose 5.6%; at the same time, for people who switched jobs, their salaries increased by 8.3%
The report said that wages increased at their slowest pace since 2021.
"The premium for switching jobs is at its smallest in three years of data," the report said.
The report noted broad-based jobless throughout the economy. The Good-producing sector lost 14,000 last month. The mining natural resource sector created 5,000 jobs last month; the manufacturing sector lost 15,000 jobs, while the construction sector lost 4,000 jobs.
Within the service sectors, the trade/transportation and utilities created 55,000 jobs. The information sector created 4,000 new positions last month, 11,000 jobs were created in the financial sector, professional services lost 5,000 jobs, education and health services created 44,000 jobs, the hospitality sector lost 7,000 jobs, and other services created 15,000 jobs.
Originally published by: Neils Christensen on Kitco News
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