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Gold prices higher following disappointing U.S. nonfarm payrolls data

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(Kitco News) - Gold prices have pushed back above $1,800 an ounce as fewer Americans found work in January.

Friday, the Bureau of Labor Statistics said 49,000 jobs were created in last month, economists were expecting to see job gains of around 85,000.

“The labor market continued to reflect the impact of the coronavirus (COVID-19) pandemic and efforts to contain it,” the report said.

Gold prices were seeing some modest gains ahead of the report and have jumped higher in initial reaction to the weaker-than-expected employment numbers. April gold futures last traded at $1,803.70 an ounce, up 0.7% on the day.

Not only did January’s employment data disappoint economist expectations but November and December data were revised lower.  November’s employment numbers were revised to 264,000 jobs created, down from the previous estimate of 336,000 jobs. Meanwhile the report said that 227,000 jobs were lost on December, down from the initial estimate of 140,000 jobs lost.

The one piece of good news in the report was a sharp drop in the unemployment rate, which fell to 6.3%, down from December’s reading of 6.7%. However, many economists are looking past this number as many discouraged workers have left the labor market.

Last week, Federal Reserve Chair Jerome Powell said that the “real” unemployment rate is probably closer to 10%.

“The US has 9.8 million fewer jobs than it did in February 2020 and to keep up with population trends, 12 million would have to be added,” said Adam Button, currency strategist at

Button noted that the U.S. dollar is seeing some selling pressure following the latest employment data, which in turn is supporting gold prices.

Not only did fewer American’s find work in January, but wages also didn’t see much of an increase. The report said that wage increased by 0.2% last month or 6 cents to $29.96.

For some analysts, the lack of wage inflation could be seen as a negative for gold, which is seen as a traditional inflation hedge. However, other analysts note that the disappointing data will keep the Federal Reserve from tightening monetary policy anytime soon.

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