On Wednesday (December 4), during the New York trading session, gold prices experienced significant volatility due to the impact of ADP employment data and a speech by Federal Reserve Chairman Jerome Powell. Despite the ADP jobs report falling short of market expectations, which initially pushed gold prices up, Powell's remarks capped further gains, and gold prices eventually closed slightly higher.
ADP Jobs Data Below Expectations, Gold Prices Surge
According to a report from ADP Research Institute and Stanford Digital Economy Lab, U.S. private-sector employers added 146,000 jobs in November, far below analysts' expectations of 163,000. This lower-than-expected jobs report highlighted the slowing recovery pace of the U.S. job market, particularly in manufacturing and financial services sectors.
Following the release of the ADP data, spot gold quickly rose from about $2,632 per ounce, briefly breaking through $2,657.18 per ounce. The anticipation of a significant rebound in employment, especially after factors like hurricanes and the Boeing strike, did not materialize with the ADP data, prompting a rebound in gold prices.
Powell's Speech Dampens Gold's Rebound
However, the rise in gold prices was short-lived as they swiftly retreated following Powell's speech. At the New York Times' "DealBook Summit," Powell stated that the Federal Reserve could be cautious about further interest rate cuts, emphasizing the current strength of the U.S. economy, with low unemployment and easing inflation. These comments limited the space for gold's rebound; the dollar recovered from its intraday low after the speech, further suppressing gold's upward momentum.
Powell noted that the U.S. economy is more robust than expected in September, thus the Fed can be more cautious about further rate cuts. He emphasized, "We can take a more cautious approach and strive for a neutral policy stance." Powell's remarks aligned with previous policy positions, indicating that the Fed would not rush into rate cuts.
Additionally, Powell mentioned that although inflation has not yet returned to the Fed's 2% target, the strong growth of the U.S. economy still supports continued expansion. This further fueled market expectations that the Fed might delay rate cuts, limiting the space for gold price increases.
Investors Focus on Upcoming Economic Data
By the close on Wednesday, spot gold rose 0.24%, settling at $2,649.68 per ounce. While Powell's speech somewhat restrained gold prices, investors are still turning their attention to the upcoming U.S. non-farm employment data and jobless claims figures. On Thursday, the U.S. initial jobless claims data will be in the spotlight, while Friday's non-farm report may have a more significant impact on gold prices.
Analysts suggest that if the non-farm data is weak, it may further boost gold prices, as weak employment data could mean the Fed's expectations for future rate hikes will cool down, thus supporting gold's rise. According to the Chicago Mercantile Exchange's FedWatch Tool, there is a 79% chance that the Fed will cut interest rates by 25 basis points at the December monetary policy meeting.
The gold market traditionally performs well in a low interest rate environment, so gold prices will continue to be driven by U.S. economic data in the coming days. If signs of a weak U.S. job market emerge, investors may increase their investment in gold, pushing prices higher.
Currently, gold prices face pressure from the dollar, and investors remain focused on the outlook for the Fed's monetary policy. With the Fed's policy meeting on December 17-18 approaching, the market will closely watch the Fed's latest statements and the impact of economic data on policy direction.
