(Kitco News) - The gold market is holding its ground above $5,000 an ounce, but a robust U.S. labor market is putting pressure on the precious metal.
After nearly a one-week delay due to a short partial government shutdown, the Labor Department said that 130,000 jobs were created in January. Employment gains beat expectations, as consensus forecasts had called for job growth of 66,000.
At the same time, the unemployment rate fell to 4.3%, down from 4.4% in December. Economists had expected an unchanged reading.
While the gold market is holding above key near-term support, it has seen renewed selling pressure in its initial reaction to the better-than-expected economic data. Spot gold last traded at $5,045.71 an ounce, up 0.41% on the day.
Some analysts have said that gold prices could struggle to attract new buying momentum, as the latest employment data shows the Federal Reserve does not need to rush to cut interest rates.
The Federal Reserve has maintained a relatively neutral monetary policy stance, as inflation pressures have remained stubbornly elevated and the labor market resilient.
“The addition of 130,000 jobs shows the labor market is stabilizing, yet the downward revisions to 2025 confirm growth slowed meaningfully last year. With unemployment still elevated, the Fed has room to stay patient and keep rate cuts on the table,” said Gina Bolvin, President of Bolvin Wealth Management Group, in a note.
January’s employment report also showed that wage inflation could remain a threat for the U.S. central bank. The report said that average hourly earnings increased by 0.4%, or 15 cents, to $37.17. Economists were forecasting a 0.3% increase.
“Over the past 12 months, average hourly earnings have increased by 3.7%,” the report said.
Although the headline number was stronger than expected, the report also highlighted sharp downward revisions for December and November. November’s figure was revised down to 41,000 jobs from the previous estimate of 56,000. At the same time, December’s employment data was revised down to 48,000 from the initial estimate of 50,000.
