(Kitco News) - The gold market continues to hold critical support at around $2,650 an ounce as cracks start to form in the U.S. labor market, even as job growth remains fairly resilient.
U.S. nonfarm payrolls rose by 227,000 last month, the Bureau of Labor Statistics reported Friday. The monthly figure exceeded consensus estimates of 218,000.
However, at the same time, the unemployment rate rose to 4.2%, up from October’s reading of 4.1%. Economists had expected the rate to remain unchanged.
The gold market is not seeing any significant reaction to the latest employment data. February gold futures last traded at $2,658.70 an ounce, up 0.39% on the day.
Along with the better-than-expected headline job gains, the report noted that wages continue to rise. Average hourly wages increased by 13 cents, or 0.4%, last month to $35.61; economists were expecting to see a 0.3% increase.
“Over the past 12 months, average hourly earnings have increased by 4.0 percent,” the report said.
Although job growth remains robust and wage inflation continues to rise, economists expect that the latest employment data won’t stop the Federal Reserve from cutting rates by 25 basis points later this month.
However, some analysts have noted that the Fed’s easing cycle is at risk if the momentum pushes into 2025.
“My base case remains that the FOMC will still deliver a 25bp cut later this month, continuing to normalize the monetary policy stance, as the labor market also continues to normalize. Naturally, the Committee will seek not to overreact to a single data point, particularly when incoming figures remain skewed by a number of one-off factors, though the modest rise in unemployment will embolden some of the Committee's doves for now,” said Michael Brown, Senior Research Strategist at Pepperstone. “That said, if the current degree of labor market resilience persists into 2025, the employment situation could force the FOMC into a slower pace of policy normalization, particularly as risks around the inflation outlook become increasingly two-sided, amid the incoming Trump Administration's tariff plans and likely delivery of further tax cuts.”
