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Gold price briefly moves higher following disappointing 210K job gains in November

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(Kitco News) - Gold prices are jumping higher, finding some new bullish momentum as fewer Americans-than-expected found work in November.

Friday, the Bureau of Labor Statistics said 210,000 jobs were created in last month, economists were expecting to see job gains of around 535,000.

The gold market was in positive territory ahead o of the report and have pushed higher in initial reaction to the weaker-than-expected employment numbers. February gold futures last traded at $1,775.7 an ounce, up 0.74% on the day.

While the headline employment number was weaker than expected, there was also some negative news for gold investors. The data shows that inflation could have peaked as wages grew less then expected in November, rising 0.3% to $31.03, according to the report. For the year wages are up 4.8%. Economists were expecting to see an increase of 5.0%.

The unemployment rate dropped sharply to 4.2%, down from October's reading of 4.6%. Economists were expecting to see a fall to 4.5%. However, the drop in the unemployment rate isn't necessarily good news as the participation rate remains weak rising to 61.8%, up from 61.6% in October. Prior to the pandemic the participation rate was at 63.5%.

Although November’s jobs gains were weaker-than-expected, the report noted strong upward revision for September’s and October’s numbers. The report said that 379,000 jobs were created in September, up from the previous estimate of 312,000. October’s data was revised up to 546,000 jobs, compared to the initial estimate of 531,000.

Katherine Judge, said that November’s employment data highlights the continued uncertainty brewing in the labor market.

“Given the scale of job openings in the US, the weak headline could reflect a lack of available workers, but there is ample uncertainty about the next few months should Omicron become the dominant variant in the US, impacting demand for services and labor force participation,” she said.

Although November’s employment data was disappointing, Andrew Hunter, senior U.S. economist at Capital Economics said that it won’t be enough to stop the Federal Reserve from increasing the speed of tapering.

He added that this could be the start of a new downtrend in the labor market.

“We remain sceptical that a further significant recovery in the labour force lies ahead – particularly given the worsening virus situation and the potential Federal vaccine mandate,” he said.

Hunter also noted that the weaker-than-expected wage data will provide some relief for the U.S. central bank.

“But the latest surveys suggest that wage growth still has further to rise. With that high wage growth already feeding through to upward pressure on prices in the form of faster unit labour cost growth, we expect core inflation to still be higher than Fed officials anticipate by the end of next year,” he said.

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