The latest US ADP Employment Change report has sent market sentiment into disarray. At the same time, it reflects a – 22,000 drop in active workers as of Oct. 2023. This is a notable reversal from the prior report, which had projected a net gain of 91,000 jobs. The most recent data has raised concerns that the labor market might be losing steam. Simultaneously, it has resurrected expectations of a potential interest rate cut by the U.S. Federal Reserve in December.
The overall conclusions to be drawn from the ADP report point to job creation having stalled out during the second half of the month. In particular, over the four-week period ending October 25, private employers saw net job losses of an average of 11,250 jobs per week. This trend is similar to the extremely bad employment data we’ve seen so far from the United Kingdom. Consequently, it is fueling expectations of earlier rate cuts in both countries.
Market analysts have been in a stupor of soft employment data. They think this plus the expected resolution of the government shutdown has pushed financial markets into a skittish wait-and-see position. Investors are eagerly awaiting what actually takes shape. Despite the concerns above, state officials are hopeful that the US federal government will be reopened before the end of this week.
The November US Veterans’ Day bank holiday on November 11th is contributing to the quiet mood across financial markets. This break will probably double the day’s quietness and handcuff trade movement. In light of these hurdles, gold prices have proven to be remarkably resilient. The XAU/USD pair, gold priced in terms of the U.S. dollar, moved up to about $4,150, gold’s highest price in three weeks.
This rate pause has buoyed technical indicators, fueling this bullish sentiment surrounding gold. The 20 Simple Moving Average (SMA) crossing above the 100 and 200 SMAs shows improving momentum. The Momentum indicator is above its 100 line and making upward progress. As a result, this signals continued buying pressure on the market.
20-day SMA located at the $4,082.05 mark serves as significant dynamic support for gold prices. This high level provides a good cushion against expected downturns. According to analysts this technical setup gives a neutral-to-bullish view for XAU/USD. Moving forward, they stay hopeful, even as we see continued strangeities in labor data and new economic headwinds.