(Kitco News) - Gold prices briefly rallied to session highs in blue sky territory even as a red-hot labor market continues to support economic activity.
U.S. nonfarm payrolls rose by 275,000 last month, according to the Bureau of Labor Statistics. The monthly figure handily beat market consensus estimates of 198,000.
Although the headline employment number beat economist expectations, the unemployment rate rose sharply last month, jumping to 3.9%, up from 3.7% in January. Economists were expecting the unemployment rate to remain unchanged.
The gold market is seeing some solid bullish momentum in initial reaction to the latest employment data, even as prices have fallen from session highs as the report dropped. April gold futures last traded at $2,183.60 an ounce, up 0.86% on the day.
Along with the sharp rise in the unemployment rate, the report also noted other weaknesses in the labor market, including weaker wage growth and downward revisions to December and January.
The report said that average hourly wages rose by $0.05 or 0.1% last month to $34.57. However, economists were looking for a wage increase of 0.2%. For the year, wages are still up 4.3% following the massive gains made in January.
Some economists note that weak wage growth is positive for gold in the short term as it eases inflation pressures and gives the Federal Reserve more room to lower interest rates in June.
Meanwhile, while February’s employment gains beat expectations, the report noted sharp revisions to January and December data. The report said that January’s employment numbers were revised down to 229,000, compared to the initial estimate of 353,000. At the same time, December’s employment numbers were revised down to 290,000, down from the previous estimate of 330,000.
Adam Button, chief currency strategist at Forexlive.com, noted that the U.S. dollar is seeing some weakness, supporting gold prices.
“The headline here was strong, but the details were not. Unemployment rose, there was a big negative revision, and -- critically -- wage growth reversed,” he said in a note.
Nicky Shiels, head of metals strategy at MKS PAMP, said in a social media post that the employment is supported for gold because it offers something for everyone.
“Its a report that is not too bad for the Fed bc inflation/wages is more important to them than NFP headline. It keeps the Fed on track for a June cut and allows the bulltrend in Gold & US Bonds to remain in tack,” she said.
The US jobs report is supportive for Gold / Precious Metals since its mixed enough to have something in it for everyone
Higher than expected NFP headline of 275k BUT the blockbuster Jan report was revised lower by a chunky 167K, UE is higher UE AND wages are lower
Its a…— Nicky Shiels (@nixsa84) March 8, 2024
