Gold Prices See Modest Gains As U.S. Adds Fewer Jobs Than Expected In July
(Kitco News) - The gold market is pushing higher Friday following weaker-than-expected growth in the U.S. labor market in July.
The Bureau of Labor Statistics said 157,000 jobs were created in last month. Economists were expecting to see job gains of 191,000. While July's numbers were disapointing some economists are noting that previous months data were revised higher. June employment gains were revised to 248,000, up from the prior tally of 213,000; at the same time May employment was revsied up to 268,000 from the previous reading of 244,000.
"Employment gains in May and June combined were 59,000 more than previously reported," the repor said. "After revisions, job gains have averaged 224,000 per month over the last 3 months."
At the same time, the unemployment rate dropped to 3.9% in line with expectations.
Gold prices were relatively unchanged on the day ahead of the report and have seen modest gains in initial reaction, December gold futures last traded at $1,223.50 an ounce, up 0.30% on the day.
The market saw a tepid rise in wages last month. The report said that average hourly earnings in July rose by 0.3% or 7 cents to $27.05. The increase was in line with expectations. For the year wages are up 2.7%, unchanged from June’s rise.
Although wages remain muted, economists say that for now, it’s not enough to prompt the Federal Reserve to adjust its current path of interest rate hikes.
“After a barn-burner quarter for growth, payrolls weren't able to continue that momentum into Q3,” said Royce Mendes, senior economist at CIBC World Markets, “Today's numbers are unlikely to do much to alter expectations for a rate hike at the Fed's upcoming meeting or the pace of hikes thereafter.”
Despite the disappointing headline figures, Paul Ashworth, chief U.S. economist at Capital Economics, said that report still points to a healthy labor market.
“This won’t derail the Fed’s plans to hike interest rates again next month,” he said.