Gold trading at session lows after U.S. economy created 147K jobs in June

NEW YORK (July 3) The gold market is struggling to find its footing as the U.S. labor market remains robust, with the economy creating more jobs than expected last month.

U.S. nonfarm payrolls rose by 147,000 in June, the Bureau of Labor Statistics reported on Friday. This figure beat consensus forecasts, as economists had anticipated job gains of around 111,000.

At the same time, the unemployment rate dropped to 4.1%, down from May’s reading of 4.2%. Economists had expected an increase to 4.3%.

In further positive news, employment data for April and May were revised higher. The report stated that May’s figure was revised up to 144,000 from the initial estimate of 139,000. Similarly, April’s estimate was revised to 158,000 jobs from the previous estimate of 147,000.

Gold is reacting as one would expect following the healthy labor market data. Spot gold came under renewed selling pressure in the initial reaction to the jobs numbers. It last traded at $3,323.70 an ounce, down 1% on the day.

Analysts note that gold is declining as the jobs report has effectively eliminated any expectations that the Federal Reserve could cut rates in July. The U.S. central bank has indicated that it is in no hurry to lower interest rates while the labor market remains strong.

Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, said that, because of the jobs data, the Fed is likely to wait until later this quarter—or even until the fourth quarter—before cutting interest rates.

Adding to the bearish sentiment for gold, the report also noted that wage inflation is beginning to cool. Average hourly wages increased by 0.2% in June to $36.30, compared to economists’ expectations of a 0.3% rise.

While some of the data exceeded expectations, not all market analysts are celebrating a strong economy. Some point out that the job gains were heavily skewed toward government hiring.

KitcoNews