The gold market continues to consolidate gains above USD 3,100, but may struggle to find fresh momentum as the U.S. labor market remains on solid footing after private companies hired more workers than expected last month, according to private payroll processor ADP (Automatic Data Processing).
ADP reported that 155,000 jobs were created in March, significantly exceeding expectations. Consensus forecasts projected 118,000 jobs created.
"Despite political uncertainty and consumer discouragement, the bottom line is this: the March total was good for the economy and employers of all sizes, if not necessarily all sectors," said Nela Richardson, ADP chief economist.
Better-than-expected jobs data weighed on gold as prices continued to slide from their overnight highs. Spot gold traded at $3,116.50 an ounce, virtually unchanged on the day.
Prior to the latest jobs report, some analysts had warned that the gold market looked a bit overbought and that strong economic data could lead to some profit-taking.
However, analysts also point to continued buying on dips as economic uncertainty remains high with President Donald Trump preparing to announce new global import tariffs on Wednesday afternoon.
While gold remains an attractive safe-haven asset, some analysts point out that the precious metal could be sensitive to the Federal Reserve's monetary policy, as the central bank is in no rush to cut interest rates. The latest ADP employment figures support the Fed's current neutral stance.
The report also noted that wage inflation remains relatively subdued. Workers who kept their jobs last month experienced an annual wage increase of 4.6 percent, while those who changed jobs experienced a 6.5 percent increase.
"The wage premium for job changers was 1.9 percentage points, matching the series low last observed in September," the report said.
While the jobs data is allaying some concerns about the health of the U.S. economy, economists caution that the ADP figure does not provide a complete picture of the labor market. Government layoffs are expected to impact and reduce Friday's official nonfarm payrolls data.
Neils Christensen, Kitco