Make Kitco Your Homepage
News Bites

U.S. Economy Created 156K Jobs, Coming In Weaker Than Expected

(Kitco News) -Gold prices remain in positive territory Friday as the U.S. economy saw weaker job growth than expected last month, according to the latest data from the Labor Department.

The Bureau of Labor Statistics said 156,000 jobs were created in September, down from consensus forecasts as economists were expecting to see job gains of 171,000. The market is also reacting to net downward revisions to job growth in July and August. The report said that July’s employment was revised down to 252,000 from the previous level of 275,000; at the same time August’s employment was revised up to 167,000 from the initial report of 151,000.

“With these revisions, employment gains in July and August combined were 7,000 less than previously reported,” the report said.

However, the trend in the labor market remains fairly strong with the three-month average coming at 192,000 jobs.

December gold futures were slightly positive ahead of the repot and are now heading towards session highs in initial reaction. December gold last traded at $1,261.80 an ounce up 0.69%. Gold is retaking lost ground after losing almost 5% since the beginning of the week.

Not only was the employment gains slightly weaker than expected, but the unemployment rate ticked higher to 5.0%. Economists were expecting to see the rate unchanged at 4.9%.

Wages also continue to grow, which could be positive for gold as it is traditionally seen as an inflation hedge. The report said that average hourly earnings rose 6 cents last month to $25.79, up 0.2% from August and in line with expectations. For the year, employees have seen their wages grow by 2.6%.

Avery Shenfeld, senior economist at CIBC World Markets, dismissed the weaker employment gains, describing the report as a modest miss. He added that it shouldn’t stop the Federal Reserve from raising interest rates by the end of the year.

“Overall, a shade on the soft side vs. hopes, but still in the range that the Fed needs to see to carry through with a rate hike in December,” he said.

Although gold is holding on to gains in the wake of the jobs report on gold analyst is not convinced that gold’s selloff has finished. George Gero, managing director with RBC Wealth Management, said that the positive gains appears to be short-term short covering.

”These downs are never over in one day,” he said.

Gero added that he would like to see higher prices with higher volume and higher open interest, which would be an indication that investors are jumping back into the gold market. “

By Neils Christensen of Kitco News;



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
kitco news