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(Kitco News) – The gold market is witnessing fresh selling pressure, as it fell from the resistance level 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 largely beat expectations as economists expected a job gain of around 250,000.
Meanwhile, the unemployment rate also exceeded expectations, falling to 3.5%, which is lower than it was in June.
The gold market was testing resistance around $1,800 an ounce prior to the employment report, but lost its upward strength in the initial reaction to the data. Gold traded last December at $1,792 an ounce, down 0.82% on the day.
According to economists, the latest labor market data will help ease fears of a growing stagnation in the market. Some politicians and economists have argued that the economy cannot be in a recession because the labor market is still strong.
Economists also said that the recent employment data will allow the Federal Reserve to maintain its hawkish stance on monetary policy.
“In a clear sign that the US economy is not in a recession, hiring accelerated in July, demonstrating that the Fed’s fight against inflation is far from over,” said Catherine Judge, chief economist at CIBC.
The report pointed to strong strength in the labor market as wages rose more than expected. The report said average hourly earnings rose 0.5%, or 15 cents, in July to $32.27. Economists had expected wages to increase by 0.3%.
The report stated that wages rose by 5.2% in the past 12 months.
Adam Patton, chief currency strategist at Forexlive.com, noted that both the US dollar and bond yields rose after the jobs report, creating two headwinds for the precious metal.
75 . odds [basis point hike] It jumped to 61% from 40% upon release.
Adding to the positive employment sentiment, the past two months have been revised higher. The report said the June employment report was revised to 398,000, up from the initial estimate of 372,000. The May data was revised to 386,000 from the previous estimate of 384,000.
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