Gold (XAU/USD) strengthened as traders reacted to the release of the latest US economic data. At the time of writing, XAU/USD was trading around $4,225, slightly higher after briefly dipping below the psychological $4,200 level the previous day.
Recent US data showed a mixed picture of underlying economic momentum. The ISM Services PMI edged up to 52.6 in November from 52.4, beating expectations of 52.1 and signaling steady expansion. Meanwhile, the ADP Employment Change report showed private sector payrolls fell by 32,000 in November, well below the 5,000 increase expected. October's figure was revised upward to 47,000.
The private employment data underscored the weakening labor market in the US. This report is also important because the October Nonfarm Payrolls (NFP) will be released simultaneously with the November report on December 16th, leaving the Federal Reserve (Fed) with few indicators to gauge employment conditions ahead of next week's monetary policy meeting.
According to the CME FedWatch Tool, the market has priced in an approximately 88% chance of a 25 basis point (bps) interest rate cut, which has weakened the US Dollar (USD) and provided a generally supportive backdrop for Gold.
Elsewhere, geopolitical tensions remain high after US envoys' talks with Moscow regarding the Ukraine conflict failed to produce significant progress. (alg)
Source: FXstreet
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