Pressured By Higher Yields, Focus Turns To US Payrolls

Gold remains stable during the Asia-Pacific session. However, on Thursday, gold experienced a decline, erasing earlier gains, following the release of US data that indicated resilience in the labour market.

• ADP private payrolls surged 497k in June, the fastest pace in nearly a year, versus 225k est and 278k prior. Initial jobless claims lifted but continuing claims fell to their lowest level since February. The JOLTS quits rate rose, suggesting increased job security. The ISM services index rose 3.6pts to 53.9 with the employment index gaining nearly 4pts to 53.1, supporting the solid backdrop of the other labour market reports.
• This reinforced expectations that the Federal Reserve will continue its tightening measures. FOMC dated OIS price a 22bp hike into the July meeting with a terminal rate of ~5.45% is seen in November. Historically, higher interest rates have a negative impact on non-yielding assets like gold.
• Attention now shifts to Non-Farm Payroll later today for a more comprehensive view of the US labour market.