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(Kitco News) – The gold market is seeing new selling pressures, falling from resistance at $1,800 as the US labor market saw significant growth in July.
Friday, the Bureau of Labor Statistics said 528,000 jobs were created in July. The data significantly beat expectations economists were forecasting job gains of around 250,000.
Meanwhile the unemployment rate also beat expectations, falling to 3.5%, a tick lower than in June.
The gold market has been testing resistance around $1,800 an ounce ahead of the employment report, but has lost its bullish traction in initial reaction to the data. December gold last traded at $1,792 an ounce, down 0.82% on the day.
According to economists, the latest labor market data will help to relieve growing recession fears in the marketplace. Some politicians and economists have argued that the economy can’t be in a recession as the labor market remains strong.
The latest employment data will also give room for the Federal Reserve to maintain its aggressive monetary policy stance, economists have also said.
“In a clear sign that the US economy is not in a recession, hiring accelerated in July, showing that the Fed’s fight against inflation is far from over,” said Katherine Judge, senior economist at CIBC.
The report noted solid strength in the labor market as wages also rose more than expected. The report said that average hourly earnings increased 0.5% or 15 cents in July to $32.27. Economists were expecting to see wages increase 0.3%.
The report said that wages have increased 5.2% in the last 12 months.
Adam Button, chief currency strategist at Forexlive.com, noted that both the US dollar and bond yields have pushed higher following the jobs report, creating two headwinds for the precious metal.
“The odds of a 75 [basis point hike] have jumped to 61% from 40% on the release,” he said.
Adding to the positive employment sentiment, the previous two months were revised higher. The report said that June’s employment report was revised to 398,000, up from the initial estimate of 372,000. May’s data was revised to 386,000 from the previous estimate of 384,000.
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