(Kitco News) - The gold market remains under pressure, trading below $3,100 an ounce, as the U.S. labor market stays robust and the economy created more jobs than expected last month.
U.S. nonfarm payrolls rose by 228,000 in March, the Bureau of Labor Statistics reported on Friday. This figure significantly beat consensus forecasts, as economists had anticipated job gains of around 137,000.
While job creation remains strong, the unemployment rate continues to rise, increasing to 4.2%, up from February’s reading of 4.1%. Economists had expected the rate to remain unchanged.
According to some economists, the data comes as a bit of a surprise, as many were expecting significant government cuts to impact employment. The report noted that federal government employment declined by 4,000 in March, following a loss of 11,000 jobs in February.
The gold market is struggling to attract new bullish momentum as it continues to face profit-taking following Thursday’s selloff. Spot gold last traded at $3,087.80 an ounce, down nearly 1% on the day.
Adam Button, Chief Currency Strategist at Forexlive.com, described the employment data as solid, which is supporting the U.S. dollar and, in turn, weighing on gold prices.
“think it reflects something that Bank of America highlighted: Weather was poor in February and that may have suppressed employment; it's bounced back. Leisure and hospitality rose 43K after a -17K previously,” he said in a note. “The U.S. dollar is modestly higher on the numbers, but there is some serious incongruity between a strong jobs report here and rising inflation, along with the market pricing in more than 5 Fed rate cuts in the year ahead.”
Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, said in a note that the headline job gains were encouraging. He added that although the unemployment rate moved up, it was for “good reasons,” as the participation rate increased.
The report said that the participation rate rose to 62.5%, up from 62.4% in February.
It also noted that wage inflation rose in line with expectations, with average hourly pay increasing 0.3%, or by nine cents last month, to $36.00.
Despite the strong employment numbers, Zaccarelli said it won’t do much to improve investor sentiment, as equity markets continue to slide lower following President Donald Trump’s global import tariff announcement.
“The market is no longer focused on the jobs market and [is] focused squarely on tariffs and trade wars as the US plays chicken with the rest of the world, potentially beginning a downward spiral into a worldwide recession,” he said.
