Gold Price Forecast: Labor Market Data Sparks Concerns, But Gold Remains Steady

Highlights

• Weak U.S. economic data and concerns of a recession
• Nonfarm payrolls expected to increase by 240k jobs in March
• The Federal Reserve is divided on interest rate hikes

Overview

Despite weak U.S. economic data sparking concerns of a slowdown, gold futures closed lower on Thursday ahead of a significant U.S. jobs report. However, bullion remained on track for a weekly increase.

The true reaction to the labor market data may not be apparent until next week, although the Forex market could see a volatile reaction to the headline number. This is due to the Good Friday market holiday,

On Thursday, June Comex gold settled at $2026.40, down $8.60 or -0.42%, while the SPDR Gold Shares ETF (GLD) finished at $186.46, down $1.37 or -0.73%.

Gold Prices Drop Amidst Weak Economic Data and Concerns Over Recession

Despite a wave of weak economic data, gold prices still fell on Thursday. The ADP National Employment report revealed that U.S. private employers had hired far fewer workers than expected in March, exacerbating growing concerns that the Federal Reserve’s rapid interest rate hikes could lead to a recession.

This followed Tuesday’s weak job openings data. Additionally, the Institute for Supply Management’s (ISM) survey showed that the services sector had slowed more than anticipated last month due to cooling demand, with a measure of prices paid by service businesses falling to a near three-year low.

Economists Predict 240k Jobs Added in March, Fed Divided on Interest Rate Hikes

Economists surveyed by Reuters predict that nonfarm payrolls increased by 240,000 jobs in March, with the unemployment rate expected to remain unchanged at 3.6%.

St. Louis Fed President James Bullard believes that the Fed should continue to raise interest rates to lower inflation as long as the labor market remains strong, while others feel policymakers should pause rate hikes if the report is weaker-than-expected.

Investors Analyze Labor Market Data for Recession Signs

U.S. Treasury yields increased as investors analyzed recent labor market data to determine the likelihood of an upcoming recession. The 10-year Treasury note’s yield increased by 1 basis point to 3.298%. The 2-year rate rose by 6 basis points to 3.829%.

The Federal Reserve’s actions to combat inflation and the consequences of recent banking collapses that caused disturbance in bond markets remained under focus.

According to the CME Group’s FedWatch tool, the market is divided on whether the central bank will raise or halt rates by an additional 25 basis points at their next meeting in May.

Investors will pay close attention to Friday’s nonfarm payrolls report to observe further indications of the Federal Reserve’s monetary policy tightening cooling the economy.