The ADP data for February in the United States was unexpectedly cold, with non farm payroll data becoming a key focus

The unexpected drop in ADP employment data for February in the United States, far below market expectations, instantly ignited investors’ sensitive nerves. The gold market was the first to react fiercely, and the price trend experienced significant fluctuations. At the same time, the evolution of expectations for the Federal Reserve to cut interest rates has entered a new stage, and the upcoming non farm payroll data is seen by the market as a key factor determining the next direction of gold.

ADP data explodes, causing severe fluctuations in the gold market

The ADP private sector employment data for February in the United States unexpectedly “exploded”, with only 77000 new jobs added, far below the market expectation of 140000, setting the lowest growth rate since July 2024. Looking at different industries, the trade/transportation/utilities sector saw a sharp decrease of 33000 jobs, becoming the biggest drag, with only the financial services sector experiencing a slight increase in salary growth to 5.1%. After the data was released, the US dollar index fell slightly in the short term, while the price of gold experienced severe fluctuations in a short period of time. Investors’ concerns about market uncertainty intensified, and risk aversion quickly heated up.

The ADP employment data in the United States has always been referred to as the “small non farm payroll” by the market, as it can predict the trend of changes in the US non farm employment population to a certain extent in advance, thus having a significant impact on the spot gold market. The sudden drop in ADP data undoubtedly adds more variables to the market, and investors are re examining their asset allocation. Gold, as a traditional safe haven asset, has once again received attention.

Expectations of Federal Reserve interest rate cuts rise again, markets cautiously observe

With the release of ADP data, the market has once again heated up discussions on the direction of the Federal Reserve’s monetary policy. Recently, the stronger expectation of interest rate cuts given by Federal Reserve Chairman Powell, as well as the “dot matrix” released by the Fed, have confirmed the likelihood of three interest rate cuts within the year. These factors have continuously raised market expectations for the Fed’s interest rate cuts. The poor performance of ADP data this time has further strengthened the market’s expectations for the Federal Reserve to cut interest rates.

However, given the contradictory nature of economic data, the future direction of the Federal Reserve’s monetary policy remains uncertain. Some analysts believe that the Federal Reserve may adopt a “wait-and-see interest rate cut” strategy, which means cautiously adjusting monetary policy while observing changes in economic data.

This uncertainty is both a challenge and an opportunity for the gold market. On the one hand, the increasing expectation of interest rate cuts will lower the opportunity cost of holding gold and enhance its attractiveness; On the other hand, the uncertainty of the Federal Reserve’s policies in the market may also lead investors to hold their money and wait, suppressing some trading enthusiasm in the gold market.

Non farm data becomes crucial, gold market awaits guidance

After the ADP data exploded, market attention shifted to the upcoming US non farm payroll report. Non farm payroll data, as a key indicator of the employment status of the non-agricultural population in the United States, not only directly reflects the operation of the US economy, but also has a significant impact on the Federal Reserve’s monetary policy.

At present, investors are in a highly tense wait-and-see state, waiting for the release of non farm payroll data. From market expectations, most institutions and analysts expect that this non farm payroll data will have a significant impact on the gold market, but the specific direction is still difficult to predict.

Spot gold quickly rose $3 after the data was released, reaching $2916 per ounce, but the upward trend did not last and then fell back to $2913.27 per ounce. Although the intraday volatility is not significant, it reflects investors’ short-term risk aversion under favorable news. Subsequently, it rose to around $2920 per ounce and fluctuated today.

Geopolitics and trade situation, potential impacts cannot be ignored

In addition to economic data and monetary policy, geopolitical and international trade situations are also important factors affecting the gold market. Recently, the Trump administration announced tariffs on multiple countries, raising concerns in the market about the escalation of global trade frictions. The rising risk aversion has driven up the price of gold. At the same time, the continued tension between Russia and Ukraine, as well as changes in agreements between the United States and Russia in areas such as mineral resources, have added more uncertainty to the gold market.

The sharp drop in ADP data in February in the United States has triggered severe fluctuations in the gold market. The evolution of expectations for the Federal Reserve’s interest rate cuts and the upcoming release of non farm payroll data will be key factors determining the future trend of the gold market. In the current complex and ever-changing market environment, investors need to remain highly vigilant, closely monitor recent changes in relevant data, and make investment decisions cautiously.