"Small non-farmers" ADP data burst cold! Gold price stands at 1985, the market is still waiting for Powell's "final decision"

U.S. private sector payrolls fell well short of expectations in October, but that likely understates the health of the labor market, which remains tight.

The ADP report released on Wednesday (Nov. 1) showed private-sector employment rose by 113,000 in October, below expectations 150,000. The labor market remains strong despite the Federal Reserve raising interest rates by 525 basis points since March 2022. Consumers were optimistic about the labor market in October, according to a Conference Board survey on Tuesday. The lower-than-expected increase likely reflects the United Auto Workers (UAW) strike against the Big Three automakers, which may have dented manufacturing payrolls. The government reported last week that at least 30,000 UAW members participated in the strike during the October survey.

The ADP report showed that wages rose 5.7% year-on-year in October, the slowest pace of growth since October 2021. Wages for people who changed jobs rose 8.4%, the smallest increase since July 2021.

Nela Richardson, chief economist at ADP: No industry has dominated hiring this month and the big post-pandemic pay rises appear to be behind us. October's data paint a broad picture of employment. While the labor market has slowed, it is still enough to support strong consumer spending.

After the ADP data was released, spot gold rose slightly by nearly $5 to $1986.29 an ounce.

(30-Minute chart of spot gold)

COMEX most active gold futures contract Beijing time on November 1st 20:15--20:16 within one minute trading disk instantly traded 1684 lots, the total value of the trading contract 336 million dollars.

Gold prices are relatively flat ahead of the Federal Reserve's policy decision, and all eyes will be on Fed Chairperson Jerome Powell's remarks for guidance on the path of interest rates.

Gold prices retreated after breaking through the key $2,000 level last week, supported by strong safe-haven inflows from rising turmoil in the Middle East, helping it post its biggest monthly gain since March in October.

Ole Hansen, head of commodity strategy at Saxo Bank, said this is just a belated consolidation after a strong rebound over the past three weeks, and prices could fall to at least $1,952.

Sharekhan, vice-president at BNP Paribas, said: "While no change in interest rates is expected, the focus will be on the Fed's assessment of the US economy and clues to future monetary policy."

Meanwhile, Asian manufacturers faced worsening pressure in October as factory activity in China slid back into recession, casting a shadow over the recovery prospects of the region's major exporters, already squeezed by weak global demand and rising prices.