Sub-200K Nonfarm Payrolls Print Will Boost Gold – Analysts

(Kitco News) - The one bright spot in the U.S. economy has been the labor market; economists note that U.S. job growth has been stellar while the rest of the economy has seen, at best, anemic growth.

However, there are concerns that even this pillar of domestic strength could start to show signs of stress on Friday with the release of January’s nonfarm payrolls report, which would be positive for gold.

According to consensus forecasts, economists are expecting that 192,000 jobs were created in January, well down from December’s impressive gains of 292,000. This would also be the first sub-200,000 print since October – by December the data was eventually revised higher to above 300,000.

Optimism for the labor market received a small boost Wednesday when private payrolls processor ADP reported slightly better than expected jobs data for January. According to ADP, 205,000 private jobs were created last month, down from December’s job growth of 267,000 but better than expectations of around 193,000.

For the gold market, Bart Melek, head of commodity strategy at TD Securities, said that in the current environment anything below 200,000 will be positive for the gold market in the near-term as it will be raise concerns of growing economic weakness.

However, he added that if employment hits this watermark, it could raise expectations that the Federal Reserve will continue on its current path of higher interest rates. “But the market right now is thinking that you probably won’t see [200,000],” he said.

Courtesy: Kitco News