Gold Rebounds as Weaker ADP Data Weakens Rate Hike Bets

Gold prices rebounded on Thursday as a weaker-than-expected U.S. private payrolls report and lower Treasury yields led to a decrease in expectations for a September Fed rate hike.

The ADP employment report showed private payrolls increased by only 38,000 in August, falling short of the forecasted 48,000. This has weakened the case for a Federal Reserve rate hike, which gold prices have been negatively affected by lately.

A 62% probability of a September Fed hike is now priced into markets, down from approximately 66-67% before. Gold does not require a complete abandonment of rate hike expectations to rally; it only needs the probability to decrease sufficiently to drive yields and the dollar down.