Gold prices testing $1,930 after June's 209K job creation
After 209,000 jobs were added in June, gold prices hit a wall at $1,930.
The gold market is increasing because the U.S. job market is losing steam. Last month, for example, fewer jobs were created than expected.
According to the Bureau of Labour Statistics, the number of nonfarm jobs in the U.S. increased by 209 in June. The market's best guess was that the number would be around 224,000 per month.
The U.S. jobless rate went down as expected, from 3.7% in May to 3.6% in June.
Before the jobs report, the gold market saw slight gains, and prices are now back to where they were when they first hit support. Gold futures for August were last sold at $1,930 per ounce, up 0.70 per cent for the day.
Along with the disappointing headline numbers, the study also showed that wage inflation is not going away. According to the survey, the average hourly wage increased by 12 cents, or 0.4%, to $33.58 last month.
According to a study, the average hourly wage has increased by 4.4% in the last year.
The report also made the job numbers for April and May look worse. From the first estimate of 339,000 jobs in May, the number was changed to 306,000. At the same time, the number of jobs in April changed from 294,000 to 217,000, which is a decrease.
Some experts are surprised by the bad news from the government because they were expecting good news after Thursday's report from the private payroll processor ADP, which showed a big jump in hirings last month.
Even though the gold market is going up in response to the news, buyers of precious metals still have to deal with the aggressive monetary policy of the Federal Reserve.
Adam Button, who is in charge of exchange strategy at Forexlive.com, says that the Federal Reserve will pay attention to the wage hike.
The chief investment officer at Zaye Capital Markets, Naeem Aslam, said that the latest job data would make it hard to know what to expect at the central bank's meeting on monetary policy later this month.
He said, "This doesn't mean that the Fed is going to change its monetary policy stance, and it also doesn't mean that the Fed can now take a more hawkish stance to control inflation." "When it comes to the gold price, we still think the risk is on the downside, but the long-term trend is still up. But right now, it's more about how strong or weak the dollar measure is. That's the main thing that affects gold prices."
Andrew Hunter, the deputy chief U.S. economist at Capital Economics, said the Federal Reserve will still raise interest rates even though the jobs report was not good.
"The annual rate of wage growth has stayed the same at 4.4%, which is still too high to be in line with inflation of 2%. This suggests that the labour market needs to loosen up even more," he said.