Gold price sees little movement as U.S. created 245K jobs in November, significantly missing expectations
(Kitco News) - The gold market is holding near a one week high as the U.S. labor market loses more momentum than expected in November.
Friday, the Bureau of Labor Statistics said 245,000 jobs were created in November; however the data missed expectations. Economists were expecting to see job gains of around 480,000.
At the same time the unemployment rate fell more than expected dropping to 6.7%, compared to October’s level at 6.9%; consensus forecasts were calling for a reading at 6.8%. Economists note that the drop in the unemployment rate comes as the participation rate fell to 61.5%, down from October’s level of 61.7%.
“If participation would have held steady, the unemployment rate would have risen 0.1 percentage point,” said Adam Button, chief currency strategist at Forexlive.com.
While the gold market is holding on to recent gains, it is not seeing much reaction to the disappointing jobs data. February gold futures last traded at $1,845.60 an ounce, up 0.24% on the day.
Not only does the weaker-than-expected headline news support fundamental demand for gold, but the report showed rising inflation pressures as wages increased more than expected. The report said that wages in November increased by nine cents to $29.58, up 0.3% from October. Economists were expecting to see a 0.1% increase.
For the year, wages are up 4.4%.
Katherine Judge, senior economist at CIBC, noted that the ongoing spread of the COVID-19 virus continues to impact the U.S. labor market.
“With the virus still spreading rapidly, December could be a more challenging month for the labor market, as some states are contemplating increasing restrictions on activity,” she said. “This coincides with the expiration of a couple of federal unemployment benefit programs at the end of the year, suggesting that further fiscal support is becoming increasingly urgent.”