BB:Gold Pares Drop as Slow U.S. Wage Gains Ease Fed Concerns
Gold futures pared declines as the U.S. added fewer jobs in June than forecast and wages stagnated, reflecting a more moderate pace of economic growth.
The addition of 223,000 jobs followed a 254,000 increase in the prior month that was less than previously estimated, a government report showed Thursday. The median forecast in a Bloomberg survey called for a 233,000 advance in June.
Gold capped a fourth straight quarterly decline on Tuesday, the longest slump since June 1997, amid concern the Federal Reserve is moving closer to raising interest rates for the first time in nine years. The economy has just completed its sixth year of expansion since the recession ended in June 2009. While the job market has rebounded, faster wage growth has been slow to follow.
The jobs report “is giving gold some support,” Tai Wong, the director of commodity-products trading at BMO Capital Markets Corp. in New York, said in a telephone interview. “The weaker-than-expected print and revisions lower, in addition to flat average hourly earnings, do not get the Fed incrementally closer” to a rate increase.
Gold futures for August delivery fell 0.6 percent to $1,161.90 an ounce at 8:48 a.m. on the Comex in New York, after touching a three-month low of $1,155.80.
The payrolls report showed that the participation rate, which indicates the share of the working-age people in the labor force, decreased to 62.6 percent, the lowest since October 1977, from 62.9 percent.
Wage Growth
Average hourly earnings at private employers held at $24.95. They increased just 2 percent over the 12 months ended in June, following a 2.3 percent gain the prior month, and posted a 2 percent gain on average since the current expansion began.
An improving outlook for the labor market is among the reasons Fed policy makers have said they may begin to raise the benchmark rate this year from near zero. Higher rates curb the appeal of the metal, which doesn’t pay interest like assets including bonds.
“The participation rate is worrying, and also the downward revision of May’s number should give gold a little bit of a support,” Chris Gaffney, the president at EverBank World Markets in St. Louis, said in a telephone interview. “People are worried about wages remaining stagnant, and are now questioning a September rate rise.”
