Gold Prices Turn Negative As U.S. Economy Adds 201k Jobs In August
(Kitco News)- Gold prices has given up some of its modest gains but continuesto hover around the psychological level of $1,200 an ounce as the labor marketadded more jobs than expected last month and wages sharply increased.
The Bureau of Labor Statistics said 201,000 jobs were created in August;economists were expecting to see job gains of around 191,000.
While the August numbers were better than expected, the June andJuly reports were revised slightly lower. June's employment data was revised to208,000 jobs, down from the previous estimate of 248,000. Meanwhile, July'sdata was revised down to 147,000 jobs from the initial estimate of 157,000.
"After revisions, job gains have averaged 185,000per month over the last 3 months," the report said.
At the same time the unemployment rate came in at 3.9%, unchangedfrom July's level.
The gold market was holding on to modest gains ahead of thereport, but has seen some selling pressure in initial reaction. December goldfutures last traded at $1,202.80 an ounce, down .12% on the day.
Not only was headline data better than expected but the U.S.economy saw a sharp increase in average hourly wages, which is supporting theU.S. dollar, according to some market analysts.
“They are strong economic numbers that support the dollar and weakengold temporarily,” George Gero, managing director with RBC Wealth Management.
Average hourly wages increased by 0.4% last month or 10 cents to$27.16. Annually, workers saw their wages increase by 2.9%. According to reports this is the strongest wage growth in nine years.
According to some economists the data will continue to supportfurther rate hikes from the Federal Reserve.
"The standout figure was the 0.4% advance in average hourlyearnings which takes the annual rate up to 2.9%, with both readings exceedingexpectations by two ticks. That justifies another rate hike this month andsuggests that underlying inflation may be picking up slightly," said Katherine Judge, senior economist at CIBC World Markets. "However, we haveseen wage growth pick up before, only to disappoint in later months and we arestill not above the 3% pace that the Fed would like to see. Today's reportshould still be marginally positive for the USD and see yields rise slightly."
Andrew Hunter, U.S. economist at Capital Economics, also said that he is expecting to see further rate hikes, starting with one in two-weeks time.
By Neils ChristensenFor Kitco News
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