Gold prices vacillated on Friday after the US unemployment report for August missed the headline number but did include a lower unemployment rate and higher-than-expected wage growth.
Gold for December delivery on the Comex division of the New York Mercantile Exchange was last down $2.40 or 0.2 percent to $1,122.1 per ounce. The yellow-metal did briefly spike to $1,133.10 but quickly reversed in the immediate aftermath.
Total non-farm payroll employment increased by 173,000 in August, below the 215,000 forecast, but the unemployment rate fell to 5.1 percent from 5.2 percent the prior month.
Even though the headline number undershot expectations, there were several positives in the report. The June total was revised to 245,000 from 231,000 and the change for July was revised to 245,000 from 215,000. With these revisions, employment gains in June and July combined were 44,000 more than previously reported.
Meanwhile, average hourly earnings month-over-month edged up 0.3 percent, above the projections of 0.2 percent.
“I’d call this a good, right-down-the-middle-of-the-fairway jobs report,” said Richmond Fed President Jeffrey Lacker, who added that today’s release “does not alter the environment for monetary policy”.
The jobs report has taken on greater importance ahead of the September Federal Open Market Committee (FOMC) meeting. The Fed is deciding whether to raise the Federal Funds rate for the first time since 2006. The rate has remained at near-zero levels since December 2008.
The CME Group FedWatch – a tool to gauge the market’s expectation of a change in the Fed Funds rate – was steadfast at 19 percent in September and 36 percent in October.
“The wage growth and lower unemployment rate offset lower job creation and keeps a September rate rise possible…markets [are] terrified of end to easy money,” a trader said.
In fundamentals, there have been talks of a less-than-optimal monsoon in India and this will weaken demand for gold, according to Dennis Gartman, editor of the Gartman Letter.
Because Indian farmers do not have access to stabile credit lines, they store their wealth in physical properties like gold.
Chinese markets are closed today due to a holiday to commemorate the 70th anniversary of the Allied victory over the Japanese Emperor during World War II. The US will be closed on Monday for Labor Day.
In the eurozone, the EU retail PMI at 51.4 was below the previous reading of 54.2.
Turning to wider markets, Germany’s DAX and France’s CAC-40 were each 2.3 percent, while the euro was 0.1 percent stronger at $1.1132 against the dollar.
As for the other precious metals, Comex silver for December delivery was down 6.7 cents at $14.640 per ounce. Trade has ranged from $14.530 to $14.825.
Platinum futures for October delivery on the Nymex declined $13.30 at $996.80 per ounce, while the most actively traded palladium contract was at $573.60, down $7.95.
(Editing by Tom Jennemann)
The post Gold wobbles following release of US Jobs report appeared first on The Bullion Desk.
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