Gold prices fall after USA Created 304K jobs in January

The gold market sees some sales pressure Friday after the US labor market showed strong growth in January, according to the latest government employment data.

Friday, the US Department of Labor said 304,000 jobs were created in January, lacking expectations; According to consensus forecasts, economists expected to see job gains of around 165,000. However, some of the job market enthusiasm has been tempered by significant revisions to the December employment number. December data was revised down to 222,000 jobs. According to reports, this is the largest revision to the employment figures since 2014.

"After audits, employment gains averaged 241,000 per month over the last 3 months," the report said.

At the same time, unemployment came in at 4.0%, a tick up from December reading of 3.9%.

The gold prices were relatively unchanged the day before the report and have lost some foundation on the first reaction to the data. April gold futures last traded at $ 1[ads1],323.80 a ounce, down 0.11% a day.

Although employment continues to grow, wage growth continues to be weak. The report said that the average hourly wage increased by 0.1% last month or by 3 cents, lack of expectations. The economists expected to see wages increase 0.3%. For the last 12 months, wages have increased by 3.2%.

According to some commodity analysts, wage growth is mixed for gold. Although subdued inflationary pressures will keep the Federal Reserve from raising interest rates, investors do not ask to buy gold as an inflation hedge.

Andrew Grantham, senior economist at CIBC World Markets, said even though the Federal Reserve is in the wait see mode, the latest employment data supports a further interest rate increase later this year.

"While it makes sense for the Fed to wait and see how interest rate hikes in 2018 affect the economy in the first half of this year, strong job search and wage growth suggest that spending spending should remain robust and decision makers should be able to go once a year.

Grantham added that the latest employment data should continue to support US dollars and weaken bond prices, which would drive bond yields higher; both factors are negative for the gold market.

Disclaimer: The views expressed in this article is the author's and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, Kitco Metals Inc. or the author may not warrant such accuracy. The article is for informational purposes only and it is not a call to exchange goods, securities or are other financial instruments. Kitco Metals Inc. and the author of this article do not accept liability for any loss or damage arising from the use of this publication.

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