Gold prices holding steady near $3,350 after U.S. economy created 139K jobs in May
NEW YORK (June 6) The gold market appears to be in no hurry to move, even as the U.S. labor market remains relatively stable, with the economy creating more jobs than expected last month.
The Bureau of Labor Statistics reported on Friday that U.S. nonfarm payrolls rose by 139,000 in May, surpassing consensus forecasts. Economists had anticipated job gains of around 126,000.
“Employment continued to trend up in health care, leisure and hospitality, and social assistance. Federal government continued to lose jobs,” the report stated.
Meanwhile, the unemployment rate held steady at 4.2%, in line with economists’ expectations.
However, the report also shows signs of slowing momentum, as the previous two months' figures were revised lower. April’s employment data was revised down to 147,000 from the initial estimate of 177,000. March’s figure was also revised downward to 120,000 from the earlier estimate of 185,000.
“With these revisions, employment in March and April combined is 95,000 lower than previously reported,” the report noted.
The mixed employment data is having little impact on gold prices, which continue to hold support around $3,350 an ounce. Spot gold last traded at $3,357.59 an ounce, up 0.18% on the day.
In more positive news for workers, wages continue to rise. The report indicated that average hourly earnings increased by 0.4%, or 15 cents, last month, reaching $36.24. The increase beat economist expectations, which had forecast a 0.3% gain. Over the past 12 months, wages have risen by 3.9%.
Some economists point out that while higher wages benefit workers, they can be a double-edged sword by potentially driving inflation higher. This could complicate the Federal Reserve’s position.
Although the U.S. labor market is cooling, economists say there is still no urgency for the Federal Reserve to cut interest rates. The central bank has reiterated that it is in no rush to ease monetary policy, as inflationary pressures remain elevated and the labor market shows resilience.
Meanwhile, the gold market remains bullishly volatile as investors assess the Fed’s neutral stance. Some analysts suggest that elevated interest rates could eventually push the U.S. economy into a recession, thereby increasing demand for gold as a safe-haven asset. Conversely, lower interest rates reduce gold’s opportunity cost as a non-yielding asset, making it more attractive. However, a rate cut could also support economic growth, potentially shifting investment capital into equity markets instead.
In this environment, commodity analysts expect gold prices to continue consolidating at higher levels while awaiting new catalysts.
KitcoNews
