Gold prices holding near $1,800 as U.S. economy creates 531K jobs in October
(Kitco News) -Gold prices are fighting to hold resistance just below$1,800 as more Americans found jobs in October.
Friday, the Bureau of Labor Statistics said 531,000 jobswere created last month. Economists were expecting to see job gains of around425,000.
Gold prices have lost some ground in initial reaction to thelabor market data. But after an initial drop, it has found some buyinginterest. December gold futures last traded at $1,791 an ounce, down 0.13% onthe day.
Not only did the U.S. economy create more jobs thanexpected, but the report said that the unemployment rate dropped to 4.6%, downfrom September's 4.8%. Economists were expecting to see a reading around 4.7%.
While the unemployment rate dropped, the report also notedthat the participation rate fell to 61.6%. Economists were expecting theparticipation rate to hold steady at 61.7% expected. Before the pandemic, therate was 62.8%.
According to some analysts, while the headline number wasbetter than expected, gold prices could be reacting to a further rise in wageinflation. The report said that last month's average hourly wages increased by11 cents or 0.4% to $30.96.
"Over the past 12 months, average hourly earnings haveincreased by 4.9 percent," the report said.
Some analysts have described the latest employment report,something all investors will be happy with.
"This is a good report for everyone. There's some strengthhere but not enough to shake the Fed from its 'transitory' narrative,"said Adam Button, chief currency strategist at Forexlive.com.
Katherine Judge, senior economist at CIBC, noted that whilethe U.S. labor market has made some significant progress so far this year,there is still a lot of work to be done.
"While better than expected, this print still leavesthe unemployment rate 1.1%-points above the lows the Fed is aiming to see inthe next two years," she said.
Michael Pearce, senior U.S. economist at Capital Economics,described the latest labor market data as improving, but still muted. He addedthat the weak participation numbers will continue to drive wage inflationhigher.
"For now, Fed officials are emphasizing the shortfallin employment as evidence that the economy is still far from their long-rungoals, with officials still arguing that participation rates will rebound asvirus fears and caregiving burdens ease. But with the labor force showing noacceleration even as case numbers drop back, we're increasingly convinced thatthe fall in participation since the beginning of the pandemic will provepermanent," he said.
By Neils ChristensenFor Kitco News
Follow neils_C
nchristensen@kitco.comwww.kitco.com