Gold Prices Rise Following Steady U.S. Employment Data, Higher Wages
(Kitco News) - Gold prices are holding on to its recent gains even as the U.S. labor market continued to show steady growth and rising wages last month.
Friday, the Bureau of Labor Statistics said 164,000 jobs were created in July, bang in line with expectations.
At the same time the unemployment rate was unchanged from June, coming int at 3.7% and missing expecations. Economists were expecting to see 3.6%.
Gold prices were up more than 1% ahead of the report and price action remains relatively unchanged; December gold futures last traded at $1,452.5, up 1.40% on the day.
Looking at wages, the report said that average hourly earnings rose 0.3% or by eight cents last month to $27.98. Over the past 12 months, average hourly earnings have increased by 3.2 percent, the report said.
Although the headline number was in line with expectations revisions for the last two months were down. The report said that May was revised down by 10,000 to 62,000 from 72,000; at the same time June’s employment numbers dropped by 31,000 to 193,000 from the initial estimate of 224,000.
Adam Button, managing director for Forexlive.com, described the numbers as most neutral employment report he can remember seeing.
“When you factor in everything else, the good and bad also balance out. The revisions were negative but wage growth was upbeat. Unemployment rose but it was because of higher participation,” he said.
Avery Shenfeld, senior economist at CIBC, said that the latest employment numbers continue to highlight the fact that the U.S. economy is not in serious trouble. He added that the data do not support the idea of further rate cuts from the Federal Reserve.
“The data are consistent with our call for just one more Fed cut, given that the US actually needs to see growth no higher than 2% to avoid overheating the labor market,” he said.