Make Kitco Your Homepage

Gold prices fall to near session lows as the U.S. economy created 253K jobs in April

Kitco News

Editor note Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!

(Kitco News) - The gold market is seeing some solid selling pressure trading near session lows as the U.S. labor market continues to see robust growth.

U.S. nonfarm payrolls rose by 253,000 last month, the Bureau of Labor Statistics said on Friday. The monthly figure was well above the market consensus estimate of 181,000.

At the same time, the U.S. unemployment rate dropped to 3.4%, beating market consensus calls of 3.6%. The unemployment rate fell as the participation rate held steady at 62.6%.

Weakness in the U.S. labor market has been one condition that Federal Reserve has said needs to be met before it looks at ending its tightening cycle. The better-than-expected employment data is weighing on gold days after the precious metal pushed to a record high above $2,080 an ounce. June gold futures last traded at $2,034.50 an ounce, down 1% on the day.

Adam Button, chief currency strategist at, noted that this is the thirteenth consecutive month that nonfarm payrolls have surprised to the upside.

"This is undoubtedly hawkish and puts the Fed in a real bind. The Fed wants to pause and may soon even need to cut, but the jobs market isn't cooperating," he said.

Another negative for gold was a push higher in wage inflation. The report said that average hourly earnings increased by 16 cents or 0.5% in April, up compared to 0.3% growth in March. Economists were looking for a 0.3% increase.

"Over the past 12 months, average hourly earnings have increased by 4.4%," the report said.

The latest employment data is creating a shift in interest rate expectations. Markets are starting to price out a potential rate cut in July.

Although the headline data was stronger than expected, the report does show a slowing trend as February and March data were revised lower. The report said that March employment data was revised down by 71,000 to 165,000 jobs. At the same time, February's data was revised down to 248,000 jobs, compared to the previous estimate of 326,000.

Despite the positive headline number, Andrew Hunter, deputy chief U.S. economist at Capital Economics, said that the downward revision could keep the Federal Reserev on track to end its aggressive hiking next month. he added that he expects wages to also cool.

"It’s true that the recent slowdown in this measure of wage growth has not been reflected in other series. Nevertheless, with job vacancies falling sharply and the job quits rate now not far above its pre-pandemic peak, we still think it’s only a matter of time before a more broad-based slowdown in wage growth takes hold," he said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.