ADP Data Plunges; Gold Soars Past US$4,230
Gold prices surged more than 3.5% to around US$4,233 per troy ounce, the highest level since June 18. The rally followed weak US labor market data that weighed on the dollar, while a drop in oil prices eased concerns regarding inflation and the likelihood of Federal Reserve interest rate hikes.
ADP Employment Change data showed the US private sector added only 44,000 jobs in July, well below the forecast of 70,000. The June figure was also revised down to 95,000 from the initial report of 98,000. These results reinforce indications of a hiring slowdown, following earlier weak JOLTS job opening data.
The ISM Services PMI rose slightly to 54.1 from 54.0 but remained below the forecast of 54.5. A reading above 50 indicates the services sector is still expanding, meaning the data does not yet signal a contraction in the US economy. In short, while labor market signals are weakening, overall economic activity remains resilient.
Gold also found support in hopes for the reopening of the Strait of Hormuz. The prospect of improved energy flows weighed on oil prices and Treasury yields, thereby reducing the opportunity cost of holding gold. However, no final agreement has been reached, and details regarding shipping control and transit fees remain under debate.
Markets lowered the probability of a Federal Reserve rate hike in September to around 57%, down from 67% the previous day. Nevertheless, Fed officials still view inflation as too high and have left the door open for further tightening, meaning gold prices remain prone to volatility ahead of Friday's Non-Farm Payrolls (NFP) report.
Newsmaker Analysis: Gold's momentum remains bullish as long as the price holds above US$4,200. Immediate resistance lies at US$4,250, followed by the US$4,280–US$4,300 range. If the US$4,200 level fails to hold, profit-taking could drive gold toward the US$4,165–US$4,150 range. Weaker-than-expected NFP data could push prices above US$4,300, whereas strong NFP figures might boost the dollar and trigger a sharp correction. While ADP provides an early signal of weakness, it is not a direct predictor of NFP results.
Source: Newsmaker.id
