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Gold prices holding the line at $1,650 as U.S. created 261K jobs in October

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(Kitco News) - The gold market continues to trade around $1,650 level even as the U.S. economy created more jobs than expected in October.

Friday, the Bureau of Labor Statistics said 261,000 jobs were created last month. The data significantly beat expectations economists were forecasting job gains of around 197,000.

While the headline line employment number was stronger than expected, the unemployment rate missed expectations, rising to 3.7%, up from September’s reading at 3.5%. According to consensus forecasts, economists were looking for a rise to 3.6%.

The gold market is not seeing much reaction to the latest employment data as it manages to hold solid gains around $1,650 an ounce. December gold futures last traded at $1,649.50 an ounce, up more than 1% on the day.

Along with solid employment gains, the report noted that wages continue to rise more than expected. Average hourly wages rose by 12 cents or 0.4% last month. Economists were expecting to see a 0.3% rise. For the year the report said that average hourly wages have increased 4.7% to $32.58.

The report also noted mixed revision to August and September employment data. September’s jobs number was revised to 315,000, up from the initial estimate of 263,000. Meanwhile August employment was revised to 292,000, down from the previous estimate of 315,000.

According to some economists, resilient strength in the labor market will force the Federal Reserve to maintain its aggressive monetary policy stance. Markets still see a relatively 50/50 chance that the U.S. central bank will raise interest rates by either 50 or 75 basis points in December; however, the advantage has shifted slightly to a 75-basis point move.

"The Fed is looking for signs of a cooling in the labor market, and the October data didn't deliver much on that front," said Katherine Judge, senior econoomist at CIBC. "Today's data still justifies another outsized rate hike at the December FOMC, unless the November data were to show a marked deterioration in labor market conditions."

Although gold continues to hold solid support around $1,650 an ounce, many commodity analysts have said that in the near-term, the Federal Reserve’s aggressive monetary policy action could continue to weigh on the market.

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