(Kitco News) - The gold market is attracting some bullish momentum, jumping back above $5,100 an ounce as the U.S. labor market showed significant weakness last month, which, according to some economists, could force the Federal Reserve to cut interest rates more than expected through the second half of the year.
U.S. nonfarm payrolls fell by 92,000 jobs in February, the Bureau of Labor Statistics reported on Friday. This figure significantly missed consensus forecasts, as economists had anticipated job gains of around 58,000.
At the same time, the unemployment rate rose to 4.4%, up from January’s reading of 4.3%. Economists were expecting to see an unchanged reading.
The gold market has been struggling to find its footing, unable to sustain a safe-haven bid despite the growing chaos in the Middle East. However, the disappointing employment data is driving a bid in the marketplace. Spot gold last traded at $5,128.50 an ounce, up nearly 1% on the day.
Along with the disappointing headline number, the economy continues to face sharp downward revisions. The report said that December’s employment data was revised down to show a loss of 17,000 jobs, compared to the previous estimate of a gain of 65,000. January’s employment data was revised down to 126,000, compared to the initial estimate of 130,000 jobs.
One bright spot in the economy is that wages continue to grow. The report said that average hourly wages increased by 0.4% last month to $37.32; economists had forecast a 0.3% increase.
“Over the past 12 months, average hourly earnings have increased by 3.8 percent,” the report said.
Jeffrey Roach, Chief Economist for LPL Financial, said that after lackluster job gains in 2025, the labor market is coming to a standstill.
“The three-month average is 6,000 and the six-month average is negative for the fourth time in five months. Looking ahead, we should expect the unemployment rate to rise. I don’t expect the Fed to act sooner than June, but if the labor market deteriorates faster than expected, officials could cut rates on April 29,” he said.
