Gold climbs after weaker-than-expected private payrolls data

Gold prices rose on Wednesday to hit a near four-week high after a weaker than expected private employment report for December provided reassurance for some in the market the U.S. Federal Reserve may be less cautious about easing rates this year.

Spot gold rose 0.5% to $2,663.79 per ounce, as of 9:55 a.m. ET (1455 GMT) and hit its highest since Dec. 13. U.S. gold futures gained 0.5% to $2,679.70.

Weaker private payrolls “is contributing to gold’s move, because ultimately, weaker employment numbers imply that the economy has been weaker than many had expected,” said Bart Melek, head of commodity strategies at TD Securities.

The ADP National Employment report showed the U.S. economy added 122,000 jobs in the private sector last month, compared with economists’ estimate of a rise of 140,000.

A separate Labor Department report showed jobless claims stood at 201,000 in the previous week, lower than estimates of 218,000.

“The bigger factor will be U.S. nonfarm payrolls on Friday, the market is expecting a change of 163 (thousand); anything significantly above that will be negative for gold,” Melek said.

Markets are awaiting minutes from the Fed’s December meeting due later in the day, and U.S. non-farm payrolls on Friday.

“I don’t think the minutes today will have much impact given the uncertainty of the new administration’s policies and the clear indication last month that Fed has moved into another, more moderated, phase of its easing,” said Tai Wong, an independent metals trader.

Investors have been considering a scenario where proposed Trump tariffs could rekindle U.S. inflation, limiting the Fed’s ability to cut rates and thereby pressuring gold.

However, Fed governor Christopher Waller said inflation should continue to fall in 2025 and allow the central bank to further reduce interest rates, though at an uncertain pace.

Bullion is considered an inflationary hedge, but high rates reduce the non-yielding asset’s allure.

Spot silver added 0.7% to $30.20 per ounce, platinum fell 0.2% to $948.58, palladium lost 0.9% to $917.65.