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Gold prices fighting back after U.S. Employment Disappoints, 130K Jobs Created in August

Kitco News

(Kitco News) - Gold prices are off their lows and trying to fight off renewed selling pressure as the U.S. economy created fewer jobs than expected in August.

U.S. nonfarm payrolls rose by 130,000 in August, according to the Bureau of Labor Statistics. The monthly figure missed market consensus projecting 163,000 new positions.

Meanwhile, The U.S. unemployment rate was unchanged at 3.7% and in line with expectations.

The gold market was under pressure ahead of the report as renewed positive risk-on investor sentiment flowed through financial markets. The yellow metal has gained ground following the worse-than-expected employment data. December gold futures last traded at $1,520 an ounce, down 0.16% on the day.

Although the headline data was worse than expected, wages were a bright spot in the labor market as paychecks are starting to grow. The monthly increase comes as wage growth has disappointed market expectations for most of the year.

The report said that average hourly earnings rose by 0.4% last month or 11 cents to $28.11. Economists were expecting to see a 0.3% rise. For the year earnings are up 3.2%.

Some commodity analysts have said that higher wages are positive for the gold market, because it is an indication that inflation will start to pick up.

Along with the weaker-than-expected job growth in August, the bureau revised down its estimates for July and June. The June employment data was revised down by 15,000 jobs to 178,000 and July was revised down by 5,000 jobs to 159,000.

“After revisions, job gains have averaged 156,000 per month over the last 3 months,” the report said.

Although the U.S. labor market appears to be slowing, Katherine Judge, senior economist at CIBC, said that the economy is still in okay shape.

“The deceleration isn't out of line with what we would expect in an economy growing near its non-inflationary potential,” she said. “Overall, this report suggests that the US labor market, while slowing, remains tight, with higher wages and gains in hours worked supporting consumption ahead.”

Adam Button, managing director at Forexlive.com said that the report was not a bad number. He added that the rise in wages is a good sign for the labor market.

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