(Kitco News) – The gold market is seeing solid safe-haven demand as the pace of hiring in the U.S. private sector falls to its lowest level since March 2023, according to private payroll processor ADP.
ADP reported on Wednesday that only 37,000 jobs were created in May, significantly missing expectations. Consensus forecasts had projected job gains of 114,000. April’s data was revised down to 60,000 jobs from the initial estimate of 62,000.
“After a strong start to the year, hiring is losing momentum,” said Dr. Nela Richardson, chief economist at ADP. “Pay growth, however, was little changed in May, holding at robust levels for both job-stayers and job-changers.”
The gold market has posted solid gains so far this week, as economic uncertainty and geopolitical turmoil continue to drive investment demand. According to some economists, the latest employment data will add to those concerns. Spot gold last traded at $3,350.30 an ounce, unchanged on the day.
While the U.S. labor market is losing momentum, the report noted that wages remain relatively stable. In May, workers who stayed in their jobs saw their annual wages rise by 4.5%, while those who switched jobs saw their paychecks increase by 7%.
In addition to renewed safe-haven demand, analysts note that the disappointing employment data could prompt the Federal Reserve to reconsider its neutral monetary policy stance.
The central bank has been clear that it is in no hurry to cut interest rates, as inflation risks remain elevated and the labor market continues to show relative stability.
Neils Christensen has a diploma in journalism from Lethbridge College and has more than a decade of reporting experience working for news organizations throughout Canada. His experiences include covering territorial and federal politics in Nunavut, Canada. He has worked exclusively within the financial sector since 2007, when he started with the Canadian Economic Press.
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