Market News

(Bloomberg) -- Gold rebounded as investors weighed the outlook for the Federal Reserve’s interest rate path following data that showed some stabilization in the job market.

Private-sector payrolls in the US increased by 42,000 after two straight months of declines, according to ADP Research. The report is one of the few monthly snapshots of the labor market as the longest government shutdown in US history delays the releases of official economic data. While helping to temper concerns of a faster deterioration in the job market, the modest payrolls increase last month is consistent with a general softening in labor demand.

Some economists said the weaker trend in hiring makes another interest-rate cut by the Fed more likely. Bullion typically benefits in a lower rate environment as it pays no interest.

The precious metal’s breakneck rally this year has faced strong resistance over the past two weeks as traders booked profit from its rapid advance that was seen as too fast, too far. Policymakers’ caution on further easy money has also weighed on the precious metal.

Total holdings of gold exchange-traded funds - a proxy for demand from institutional and retail investors - experienced two straight weeks of net outflows by the end of October.

After joining a global crowd of bargin hunters, US retail investors have had “a breather” in the past week as they digest what’s happened, according to Greg Roberts, chief executive officer of A-Mark Precious Metals, one of the top wholesalers and retailers of precious metals products in the US.

“It should not be a big surprise to see the yellow metal consolidate in a lower, $3,800-to-$4,050-an-ounce trading range,” TD Securities strategist Bart Melek said in a note, citing factors including ambiguities over the outlook for Fed rate cuts, as well as concerns over retail buying in China.

Still, the factors that contributed to gold’s gains this year are still mostly intact, and elevated buying by global central banks and strong demand from private investors should send prices back up after the consolidation phase, Melek added.

A-Mark’s Roberts expects demand from retail investors to continue as they look to diversify to get exposure to bullion.

Gold rose  to $ an ounce as of  in New York. The Bloomberg Dollar Spot Index was steady after closing at the highest level since mid-May. Silver was up %, while platinum and palladium both advanced.

Copper traded on the London Metal Exchange rose 0.3% to settle at $10,697.50 a metric ton. All other LME metals declined.

--With assistance from Yihui Xie and Jack Ryan.