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(Kitco News) – Gold prices pushed back above $ 1800 per ounce as fewer Americans found work in January.
The Bureau of Labor Statistics said Friday that 49,000 jobs were created last month, and economists expect to find about 85,000 jobs.
“The labor market has continued to reflect the impact of the coronavirus (COVID-19) pandemic and efforts to curb it,” the report said.
Gold prices made moderate gains ahead of the report and jumped higher in the initial response to the weaker-than-expected job numbers. Gold futures in April last traded at $ 1,803.70 per ounce, up 0.7% on the day.
Not only did the data on January’s employment disappoint the economy’s expectations, but the data from November and December were revised lower. The number of jobs in November was revised to 264,000 jobs created, compared to the previous estimate of 336,000 jobs. Meanwhile, the report said 227,000 jobs were lost in December, compared to the initial estimate of 140,000 jobs lost.
The one good news in the report was a sharp drop in the unemployment rate, which fell to 6.3%, from 6.7% in December. However, many economists look beyond this number as many discouraged workers have left the labor market.
Last week, Federal Reserve Chairman Jerome Powell said the “real” unemployment rate is likely to be closer to 10%.
“The US has 9.8 million fewer jobs than in February 2020 and to keep pace with population trends, 12 million needs to be added,” said Adam Button, forex strategist at Forexlive.com.
Button noted that the US dollar has some selling pressure following the latest employment data, which in turn supports gold prices.
Not only did fewer Americans get jobs in January, but wages also did not rise much. According to the report, wages rose 0.2% or 6 cents to $ 29.96 last month.
For some analysts, the lack of wage inflation can be seen as negative for gold, which is seen as a traditional inflation hedge. However, other analysts note that the disappointing data could deter the Federal Reserve from tightening monetary policy soon.
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