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(Kitco News) – According to the latest government data on employment, the gold market is experiencing some selling pressure on Friday after the US labor market posted strong growth in January.
On Friday, the US Department of Labor said that 304,000 jobs were created in January, missing expectations; According to consensus forecasts, economists were expecting employment gains of about 165,000 people. Part of the enthusiasm in the job market was, however, tempered by a major revision of the December employment figures. Data for December has been revised to 222,000 jobs. According to reports, this is the largest revision of employment figures since 2014.
"After revisions, job gains have averaged 241,000 per month over the past three months," the report says.
At the same time, the unemployment rate reached 4.0%, against 3.9% in December.
Gold prices remained relatively unchanged the day before the report and lost ground in the initial reaction to the data. The latest gold futures on April traded at $ 1,323.80 an ounce, down 0.11% on the day.
Although employment continues to grow, wage growth remains lukewarm. The report indicates that average hourly earnings rose 0.1% last month or 3 cents, missing expectations. Economists expected to see wages rise by 0.3%. In the last 12 months, wages increased by 3.2%.
Wage growth is mixed for gold, according to some commodity badysts. Although weak inflationary pressures prevent the Federal Reserve from raising interest rates, it does not encourage investors to buy gold to hedge against inflation.
Andrew Grantham, senior economist at CIBC World Markets, said that although the US Federal Reserve is on hold, the latest data on employment support a further rise in interest rates later this year.
"It makes sense that the Fed is waiting for the impact of rising 2018 rates on the economy in the first half of this year, strong job creation and wage growth. suggest that consumer spending should remain strong and that again this year, "he said.
Grantham added that the latest employment data should continue to support the US dollar and weaken bond prices, leading to higher bond yields; both factors are negative for the gold market.
Warning: The opinions expressed in this article are those of the author and may not reflect those of the author. Kitco Metals Inc. The author has endeavored 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. This is not a solicitation to exchange merchandise, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept liability for losses and / or damage resulting from the use of this publication.
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