Editor’s Note: With so much market volatility, stay on top of the news of the day! Stay up to date in minutes with our quick summary of today’s must-read news and expert opinions. Sign here!
(Kitco News) – Gold prices fell above $ 1,800 an ounce, as fewer Americans found work in January.
On Friday, the Bureau of Labor Statistics said that 49,000 jobs were created last month, economists expected to see job gains of about 85,000.
“The job market continued to reflect the impact of the coronavirus pandemic (COVID-19) and efforts to contain it,” said the report.
Gold prices were making some modest gains before the report and jumped higher in the initial reaction to weaker than expected employment numbers. Gold futures in April were last traded at $ 1,803.70 an ounce, up 0.7% on the day.
Not only did the January employment data disappoint economists’ expectations, but the November and December data were revised downward. November job numbers have been revised to 264,000 jobs created, below the previous estimate of 336,000 jobs. Meanwhile, the report said that 227,000 jobs were lost in December, below the initial estimate of 140,000 jobs lost.
The only good news in the report was the sharp drop in the unemployment rate, which fell to 6.3%, compared to the December reading of 6.7%. However, many economists are looking beyond this figure, as many discouraged workers have left the job market.
Last week, Federal Reserve Chairman Jerome Powell said that the “real” unemployment rate is probably closer to 10%.
“The US has 9.8 million jobs less than in February 2020 and to keep up with population trends, 12 million would have to be added,” said Adam Button, Forexlive.com exchange strategist
Button noted that the US dollar is experiencing some selling pressure after the latest employment data, which in turn is supporting gold prices.
Not only did fewer Americans find work in January, but salaries did not increase much, either. The report said the salary increased 0.2% last month, or 6 cents, to $ 29.96.
For some analysts, the lack of wage inflation can be seen as a negative factor for gold, which is seen as a traditional protection against inflation. However, other analysts note that disappointing data will prevent the Federal Reserve from tightening monetary policy anytime soon.
Legal Notice: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. It is not a request to make any exchange of goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article are not responsible for losses and / or damages arising from the use of this publication.