Gold Closes Lower Following Weaker Than Expected Jobs Report – An Oxymoron?

On the surface, a much weaker than expected employment report was seen as an underlying bullish factor for gold. However, today gold closed lower, making the first gains as market participants digest today’s extra jobs added in September. In the case of the current decline in the price of gold, it’s just an oxymoron if you don’t look at the big picture, because the devil is in the details.

Today, the Labor Department reported that the additional new jobs added in September were dismal and far below economists’ forecasts. Only 194,000 jobs were created last month, with forecasts ranging from 450,000 to 500,000 new jobs created in September. These forecasts come from poles created by Reuters and Dow Jones.

MarketWatch reported that “the increase in hiring was well below Wall Street forecasts, exacerbated by a decline in public school employment. Economists polled by the Wall Street Journal predicted 500,000 new jobs. The MarketWatch article also said that “September’s lukewarm jobs report adds to growing evidence that the recovery has slowed, but that probably won’t stop the Federal Reserve from announcing plans soon to start weaning the market down. ‘saving its easy money strategy “.

In other words, with such a lukewarm report not only below the figures released in August 2020 but significantly below the estimates, it would be logical to expect this fundamentals to have a moderate to strong bullish impact on the market. gold price. In effect, this would allow the Fed to start shrinking later rather than earlier. However, only the September figures do not give the full picture and explain why gold was unable to hold on to its early gains.

Part of the reason gold closed well below earlier gains after the jobs report was due to government revised estimates in August. Originally, the Labor Department reported that 235,000 jobs were added in August, which is now updated to 332,000 jobs. Add to this fact, a government report released yesterday found that jobless claims in the United States fell by 38,000 and currently stand at 326,000. It is also a sign that the economic recovery continues to gain momentum. . The net result of these factors pushed the unemployment rate in the United States from 5.2% to 4.8%. This is the lowest unemployment rate since the start of the pandemic.

All of these numbers hint at the problem our economic recovery is plagued with, but certainly don’t get off the page, to a lot of people who don’t want to return to work for one reason or another.

The inability of businesses to hire the workers they need and get the supplies they need has made goods and services more expensive. This is one of the main reasons we have experienced the biggest increase in inflation in the United States in the past 30 years. It was believed that when additional federal unemployment benefits were exhausted in September, there would be a stampede of these former unemployed people in search of gainful employment. However, it remains difficult for companies to find when they were offering higher wages.

While the 11 million unemployed have now contracted around 5 million people, that number is still far below employment levels before the start of the pandemic.

The above chart titled Chart 2 is a 15 minute candlestick chart. It’s clear to see what happened immediately after the release of the jobs report, which takes place early Friday. The arrow under the number eight signals the start of Friday. You can see that gold went from $ 1758 to a high of $ 1782 in the first four hours. However, over the next 1h15, gold prices fell from $ 1,782 to $ 1,755.60.

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Wishing you, as always, good exchanges and good health,