(Kitco News) - The gold market is under pressure testing initial support at $2,300 an ounce as the U.S. labor market remains red hot.
U.S. nonfarm payrolls rose by 303,000 last month, according to the Bureau of Labor Statistics. The monthly figure handily beat market consensus estimates of 212,000.
At the same time, the unemployment rate dropped, falling to 3.8%. Economists were expecting to see an unchanged reading at 3.9%.
The gold market is seeing some selling pressure following the latest employment data. June gold futures last traded at $2,302.80 an ounce, down 0.23% on the day.
While the U.S. economy continues to create new jobs at a breakneck pace, wages are rising in line with expectations. The report said that average hourly wages increased by 12 cents or 0.3% last month to $34.69.
At the same time, February’s wages were revised higher to 0.2%, from the initial estimate of 0.1%.
“Over the past 12 months, average hourly earnings have increased by 4.1 percent,” the report said.
Some economists note that subdued wage inflation could keep the Fed on track to lower interest rates later this year even if the labor market continues to grow. However, the latest data is causing a small shift in expectations for a June rate cut. According to the CME FedWatch Tool, markets see a 58% of a rate cut in June, down from 66% Thursday.
Paul Ashworth, Chief North American Economist at Capital Economics, said that even perma-bears will struggle to find something to dislike about this employment report.
“The blockbuster 303,000 increase in non-farm payrolls in March supports the Fed’s position that the resilience of the economy means it can take its time with rate cuts, which might now not begin until the second half of this year,” he said in a note.
“Admittedly, the gains in non-farm payrolls still look a little lopsided, with government employment up by 71,000 and healthcare & social assistance employment increasing by 81,000. The 39,000 rise in construction employment suggests the unseasonably mild winter was also still providing a temporary boost to employment. The 49,000 increase in leisure & hospitality jobs could also be weather related, but it was still enough to restore employment in that sector finally back to its pre-pandemic level,’ Ashworth added.
