Gold price rises as U.S. job growth slows slightly in December but unemployment rate drops to 3.5%

(Kitco News) Gold moved higher after the U.S. employment data from December showed a slight slowdown in hiring.

U.S. nonfarm payrolls rose by 223,000 last month, according to the Bureau of Labor Statistics. The monthly figure was above the market consensus estimate of 200,000. The November data was revised down to 256,000 positions added.

The U.S. unemployment rate dropped to 3.5%, beating market consensus calls of 3.7% for December. The number of unemployed ticked down to 5.7 million.

The biggest job gains were reported within the leisure and hospitality, health care, construction, and social assistance sectors.

"In December, employment in leisure and hospitality rose by 67,000 … Health care employment increased by 55,000 … Employment in construction increased by 28,000, [and] social assistance added 20,000 jobs," the report said.

The labor force participation rate was little changed at 62.3%. Year-over-year average hourly earnings, which is another key element in the report, especially when it comes to inflation, rose 4.6% last month. This was below markets’ expectations of 5% and following November’s downwardly revised gain of 4.8%.

December’s slowdown in employment growth was not as strong as markets were expecting, which means the Federal Reserve is likely to remain hawkish for longer, according to economists.

“The Fed might have to wait a little longer to see the degree of cooling in the labor market that it is looking for in order to put an end to its hiking cycle, with the December data sending mixed signals. The 223K December job gains is a little above the 203K consensus expectation, but a 28K negative revision to the prior two-month job tally leaves total employment broadly where expected,” said CIBC Capital Markets economist Karyne Charbonneau. “This report is still consistent with the need for an additional 50bps from the Fed before a pause in the hiking cycle.”

Gold advanced in response to the mixed employment data, with February Comex gold futures last trading at $1,855.60, up 0.81% on the day