What can US ADP data tell about gold price outlook?

The US ADP data, which has been a significant factor in gold traders’ predictions, has missed the forecast and has altered the outlook for the Fed. The US central bank’s strategy has led to a decline in the dollar index and a positive impact on the gold price. However, the key piece of the puzzle is still missing, which is the US NFP, the overall and clearer picture of the US labour market.

Traders have been focused on the second most important economic reading, the US ADP data, which typically sets the tone for the main labour market number, the US NFP data. The data released today indicates a significant slowdown in the private job market during May, with companies adding only 152K jobs, significantly less than the downward revision of 188K and below the forecast of 175K. This is the lowest print since January, indicating that the Fed cannot be confident about the private employment data.

Both the US JOLTS data and the US ADP number echo the same echo, suggesting that the Fed is wrong if they think the labour market is tight. Smart money knows that if the labour market is not strong enough, the Fed Chairman will have no other option but to begin the process of lowering the intertest rate.

The US ADP data has had a positive influence on the gold price today, causing it to move higher, as traders do not anticipate or hope for a rate cut from the Fed.

Between now and Friday, the price action for the precious metal is expected to remain sideways, with the upside trading within the region or within the boundary of 2362, and the downside focusing on the number 2313.