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(Kitoko News) – The gold market remains modestly higher but aims to end the week bearish below $1,750 per ounce as the US economy continued to add slightly more jobs than expected last month.
On Friday, the Bureau of Labor Statistics said 315,000 jobs were created in August. The data exceeded expectations economists had expected to add about 295,000 jobs.
However, the unemployment rate jumped more than expected, rising 3.7% last month. The economist had expected interest rates to stabilize at his 3.5%.
The gold market is showing some buying momentum following the latest employment report. Gold futures closed at $1,721 an ounce in December, up 0.68% on the day.
Headline numbers were positive, but the report pointed to a significant downward revision in June. The bureau revised its employment figures for June down by 105,000 to 293,000. The July data has been revised from the original estimate of 528,000 to 526,000.
Gold is also positive for signs that wages are flattening and inflationary pressures continue to ease. Average hourly wages increased by 0.3%, or 10%, last month, according to the report. Economists had expected to see an increase of 0.4%. Annual wages he rose 5.2%.
It may seem counterintuitive to some investors that weak wage inflation would have a positive impact on gold. However, market analysts say the easing of inflationary pressures could cause the Federal Reserve to slow down the pace of monetary policy tightening, which would be positive for gold.
So far, the data hasn’t had much of an impact on interest rate expectations. The market sees a 75% chance that the Federal Reserve will raise the Fed Funds rate by 75 basis points later this month, according to the CME FedWatch tool.
CIBC senior economist Avery Shenfeld said that while the data were positive, the report still contained enough “bad news” to bring some relief to the market.
“In the overheated economy in the US, slightly bad news should be good news for the market, and today’s jobs report showed a bit of that trend,” he said. “The bond market has sold out in the days leading up to the data, and today should be a bit of a relief.
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