Gold futures turned higher Friday morning, after the U.S. created 559,000 new jobs in May, according to the latest monthly update from the Labor Department, missing Wall Street estimates and suggesting the Federal Reserve may maintain its easy-money policies for longer.
The unemployment rate, meanwhile, slipped in May to a pandemic low of 5.8% from 6.1%. Consensus estimates were for a gain last month of up to 671,000 jobs, based on a poll of economists by Dow Jones and The Wall Street Journal. The unemployment rate, meanwhile, was expected to dip to 5.9% from 6.1%.
The labor-market results suggest that the economy and the market faces a bumpy recovery from the COVID pandemic, which may give the Federal Reserve pause in its consideration of removing easy-money policies and normalizing benchmark interest rates, which currently stand at a range between -0% and 0.25%.
That is an environment in which gold may continue to climb, strategists say.
Fed members have said that jobs are a point of focus in determining whether the economy needs further support in the recovery from COVID.
“While the downside miss from forecasts was not big, there were some market watchers that were expecting a big miss to the upside on the non-farm jobs number, and that likely helped to boost the precious metals markets,” wrote Jim Wyckoff, senior analyst at Kitco.com, in a daily note.
The headwinds for bullion produced on Thursday were blamed on the better-than-expected U.S. private-sector payrolls report for May. The ADP report showed 978,000 new private sector jobs were created in May. That was well above the rise of 680,000 forecast by economists surveyed by The Wall Street Journal.
Gold for August delivery GCQ21, +0.83% GC00, +0.83% was trading 12.60, or 0.7%, higher at $1,886 an ounce, after finishing Thursday at its lowest since May 18.
Meanwhile, July silver SIN21, +1.43% was trading 28 cents, or 1.1%, higher at around $27.76 an ounce, after skidding 2.6% a day ago.
The dollar was lower, as measured by the ICE U.S. Dollar Index DXY, -0.36%, off 0.2%, after a sharp rise Thursday, and the 10-year Treasury note yield TMUBMUSD10Y, 1.616% was holding steady at around 1.62%.
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