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Gold Shrugs Off 211K Gain In April Employment

Kitco News

(Kitco News) - Gold prices are bouncing around unchanged levels, seeing little reaction after the U.S. economy created more jobs than expected.

Friday, the Bureau of Labor Statistics said 211,000 jobs were created in April, economists were expecting to see job gains of 194,000.  The stronger-than-expected report comes after last month’s disappointing jobs growth.

At the same time the unemployment rate came in at 4.4%, down from last month’s rate of 4.5% and better than economists were expecting.

While the headline number was slightly better than expected, revision showed net losses in the last two months. March employment was revised down to 79,000 jobs, from its initial report of 98,000 jobs; February’s report was revised up slight to 232,000 jobs from the previous report of 219,000.

According to the report, job gains have averaged 174,000 during the last three months.

Gold prices were modestly positive on the day ahead of the report but have lost ground in initial reaction. June Comex gold last traded at $1.228.60 an ounce, flat on the day.

The mining sector continues to see employment growth with 9,000 jobs created in the sector last month, with the majority in support services. According to the report, the mining sector has created 44,000 jobs since its recent lows from October 2016.

Royce Mendesm, senior economist at CIBC World Markets, said that one of the reason behind the market’s muted reaction could be wage growth. Average hourly earnings increased by 7 cents or 0.3% from the previous month to $26.19. In the last 12 months wages have increased 2.5%.

“The annual rate of wage growth is now at the bottom end of the range its been in since mid-2016, and is notably below the Fed's 3-4% preferred rate,” he said.

However overall, he added that the data is positive enough to give the Federal Reserve room to raise interest rates in June.

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