Gold prices tick higher on benign US employment data

Gold edged higher on Wednesday after data showed US private payrolls rose at a moderate pace last month, while investors digested remarks from Federal Reserve Chair Jerome Powell and looked forward to Friday’s non-farm payrolls report.

Spot gold was up 0.4% at USD 2,654.03 an ounce by 02:15 p.m. ET (1915 GMT). US gold futures settled 0.3% higher at USD 2,676.20.

“Gold bounces as ADP disappoints, coming in just short of consensus. Market was looking for a bigger bounce a month after the hurricanes and the Boeing strike,” said Tai Wong, an independent metals trader.

Private payrolls rose by 146,000 last month, the ADP report showed. Economists polled by Reuters had forecast private employment increasing by 150,000 positions.

Powell said the recent performance of the economy will allow the US central bank to be more judicious with the future path of interest rate cuts.

Investors now await Friday’s pivotal US payroll report and next week’s inflation data for clues on the Fed’s policy trajectory.

Gold is seeing a muted reaction today, with a stronger impact expected from the upcoming US nonfarm payrolls and if data points to weakening employment it would support prices, said Everett Millman, chief market analyst with Gainesville Coins.

US central bankers on Tuesday signaled inflation is gradually heading toward the 2% target, hinting at potential interest rate cuts.

Traders are pricing in a 77% chance of a 25-basis-point cut at the Fed’s Dec. 17-18 meeting. Bullion, which does not pay any interest, historically performs well in low-interest rate environments.

Safe-haven gold was also supported by global geopolitical unrest, including South Korea’s political turmoil, France’s government facing collapse, relentless Russian drone strikes in Ukraine and Israel threatening war with Lebanon if its truce with Hezbollah collapses.

Spot silver rose 1% to USD 31.33 an ounce, platinum lost 1.3% to USD 940.6 and palladium was up 0.5% at USD 976.56.

(Reporting by Sherin Elizabeth Varghese in Bengaluru, additional reporting by Brijesh Patel and Swati Verma; Editing by Krishna Chandra Eluri)