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(Wallace Refiners) – Gold prices are off their six-week highs but still holding on to modest gains after the release of strong labor market data as the U.S. economy created more jobs than expected in October.
Friday, the Bureau of Labor Statistics said 638,000 jobs were created in October, economists were expecting to see job gains of around 595,000.
“These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it. In October, notable job gains occurred in leisure and hospitality, professional and business services, retail trade, and construction. Employment in government declined,” the report said.
At the same time the unemployment rate came in at 6.9%, down compared to September’s level at 7.9%; consensus forecasts were calling for a reading at 7.7%.
The gold market has seen some modest profit taking in initial reaction to the heathy nonfarm payrolls numbers. December gold futures last traded at $1,953.2, up 0.31% on the day.
However the latest employment report was not all positive. While more people are getting back to work, they aren’t seeing major wage increases. The report said that average hourly wages increased by four cents or 0.1% to $29.50. The wage growth was weaker than expected as consensus forecasts were calling for a 0.2% rise.
Although the U.S. labor market continues to show impressive strength, many economists note that there is still a long way to go before employment are back to pre-pandemic levels.
Katherine Judge, senior economist at CIBC, said that after Friday’s report there are now fewer than 10 million workers unemployed as just more than half the jobs lost during the pandemic have returned.
However, Judge also raised concerns that a resurge in cases in America could weight on the economy and employment in the new year.
“Despite the positive surprise in today’s report, as new virus cases continue to skyrocket, the previous re-opening of businesses appears to be less sustainable, suggesting that employment gains could slow or possibly reverse in the coming months,” she said.
For now though most U.S. economic data is taking a back seat to the ongoing election in the U.S. While Biden is currently leading in Electoral College votes, because of unprecedented turnout in advance polling several critical states are still counting ballots. Races in Georgia, Pennsylvania, Nevada, Arizona are too close to call.
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