Gold prices rose by 2% due to weak data on number of employed in U. S.
2023.03.10 15:54
Gold prices rose by 2% due to weak data on number of employed in U. S.
By Ray Johnson
Budrigannews.com – After benign U.S. jobs growth for February indicated a smaller rate hike than initially thought, Gold reached a one-month high on Friday, indicating that it may be ready to break out of the mid-$1,800 range in which it has been trapped for the past four weeks.
Friday’s report from the Labor Department showed that the United States added 311,000 jobs in February, which was higher than expected but less than in January. This could help the Federal Reserve in its efforts to lower inflation given the persistently high rate of wage and employment growth.
After the enormous addition of 504,000 jobs in January, the so-called nonfarm payrolls increased last month. Financial experts had figure a development of 205,000 in February and 185,000 in January. The Fed was relieved once more when the unemployment rate increased from 3.4% in January to 3.6% in February.
Gold for April delivery on New York’s Comex settled Friday’s trading at $1,867.20 an ounce, up $32.60, or 1.8%, in response to the most recent nonfarm payrolls report. The highest price of the session was $1,871.85, the highest since the February 9 high of $1,884.60.
April gold gained 0.7 percent for the week.
By 15:00 ET (20:00 GMT), the spot price of gold, which some traders track more closely than futures, was at $1,862.90, up $32.02 or 1.8% for the day. The spot gold price reached a session high of $1,867.36.
According to Sunil Kumar Dixit, chief technical strategist at SKCharting.com, if the current upward momentum continues, spot gold appears poised to move closer to $1,890.
According to Dixit, “Wild swings of $40 from a $1,827 low to 1867 high, witnessed post-NFP, suggests an opening of new ground toward $1,878-$1,883 if prices can sustain above the dynamic support zone of $1,852-$1,848.” Spot gold can return to the $1,832-$1,828 support zone if this fails.
Prior to the release of the most recent nonfarm payrolls report on Friday, it was anticipated that the Federal Reserve would settle on a 50-basis point increase for its March 22 rate decision. Although there was not enough agreement on that, some analysts believed that the central bank might opt for a 25 percent basis point hike instead due to the relatively weaker growth in payrolls in February compared to January.
In a post that was made on the ForexLive forum, economist Greg Michalowski stated, “The unemployment rate was higher and wages were lower than expectations.” Will the Fed also be affected by the new calculus? Will they delay a 50 bp increase?
The Federal Reserve has stated that a slowdown in the labor market is required to control inflation, which has proven to be more stubborn than anticipated.
As the nation’s labor market continues to astonish economists with stupendous growth month after month, excellent jobs data have been one of the Fed’s biggest challenges.
The Fed is in a unique predicament, whereas policymakers all over the world typically rejoice upon the release of positive employment figures. The central bank wants to see an improvement in labor conditions that are currently a little “too good” for the economy. In this case, unemployment is at its lowest level in more than 50 years, and average monthly wages have increased continuously since March 2021.
Because of this, many Americans have been spared the most severe price pressures since the 1980s and have been encouraged to spend more, which has fueled inflation even more.
According to economists, the number of jobs created each month needs to fall significantly short of expectations in order to result in some improvement—at the very least—in employment and wage security—which, according to the Federal Reserve, are currently the agency’s two greatest challenges in the fight against inflation.
In the United States, inflation as measured by the Consumer Price Index reached a 40-year high of 9.1% in the year ending June 2022. It has since slowed down, reaching 6.4% annualized growth in January, but it is still well above the Fed’s target of 2% per year. Tuesday, March 14 is the CPI’s next reading.
In testimony this week before the United States Congress, Fed Chair Jerome Powell stated, “Although inflation has been moderate in recent months, the process of getting inflation back down to 2% has a long way to go and is likely to be bumpy.” The most recent economic data, especially inflationary pressures, have been more robust than anticipated.
Since March of last year, the Federal Reserve has increased interest rates by eight basis points, adding 450 basis points to contain price inflation. Prior to the global coronavirus outbreak in 2020, rates were nearly nonexistent.
In March of last year, the Fed raised rates by 25 basis points for the first time since COVID. After that, it moved up with a 50-basis-point increase in May, followed by four back-to-back 75-basis-point jumbo hikes from June to November. In December, it increased by 50 basis points, while in February, it increased by 25 basis points.
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