Gold prices down nearly 1% on the day after 379K jobs were created in February
(Kitco News) - Gold prices remain under pressure dropping further below $1,700 as more American than expected found work in February.
Friday, the Bureau of Labor Statistics said 379,000 jobs were created last month. Economists were expecting to see job gains of around 197,000.
The gold market was under pressure ahead of the latest employment numbers and has lost more ground in initial reaction. April gold futures last traded at $1,685.60 an ounce, down almost 1% on the day.
Not only did the headline data show better-than-expected job growth last month, but the report said that the unemployment rate also declined, falling to 6.2%, down from January's reading of 6.3%. Economists were expecting the unemployment rate to remain unchanged.
Revisions to January's employment data were also better than expected. The previous employment data was revised to 166,000 jobs, up from the initial estimate of 49,000.
It wasn't just the headline number that is dragging down gold prices. The report also highlighted muted wage growth. The report said that average hourly earnings increased 0.2% last month to $30.01. The increase was in line with expectations.
Adam Button, chief currency strategist at Forexlive.com, noted that bond yields and the U.S. dollar spiked higher in initial reaction to the jobs data. Both factors are negative for gold prices.
Paul Ashworth, chief U.S. economist at Capital Economics, said that that latest employment data bodes well for the economy recovery.
“With COVID case numbers still falling sharply, more large-scale fiscal stimulus on the way and the vaccination program likely to reach critical mass before mid-year, the US is well-placed to recover a significant number of those lost jobs this year,” he said in a note to clients.