Price of Gold Fundamental Daily Forecast – NFP Disappointing for Those Betting on Easy Policy Decision for Fed

Gold futures are edging higher following the release of the June U.S. Non-Farm Payrolls report that came in above the consensus estimate, but below the whisper number. Nonetheless, job growth jumped higher last month as businesses looked to keep up with a rapidly recovering U.S. economy, the Labor Department reported Friday.

At 13:20 GMT, August Comex gold is trading $1794.50, up $17.70 or +1.00%.

Non-Farm Payrolls increased 850,000 for the month, compared to the Dow Jones estimate of 706,000 and better than the upwardly revised 583,000 in May. The unemployment rate, however, rose 5.9% against the 5.6% expectation.

The jobless rate increase came even though the labor force participation rate was unchanged at 61.6%. A separate figure that accounts for discouraged workers and those holding part-time jobs for economic reasons fell sharply to 9.8%, with the 0.4% percentage point decline putting the so-called real unemployment rate below 10% for the first time since March 2020, CNBC reported.

Average hourly earnings increased 0.33% for the month and 3.6% year over year, both matching Dow Jones estimates.

According to CNBC, aggregate wage growth had been distorted through much of the pandemic as lower-earnings workers in high-contact industries like hospitality remained sidelined. The June gain puts the job market ahead of its previous pace; average hourly earnings rose 3% in February 2020 year over year at a time when lower-earning workers finally had been seeing gains after a generation of stagnant paychecks.

Short-Term Outlook

Straight up, I don’t think the U.S. Non-Farm Payrolls report shed enough light on the Federal Reserve’s next move. The reading was expected to be significant because Federal Reserve Chairman Jerome Powell put the focus on a strong labor market while holding on to a transient inflation view. From this perspective, I think the report was enough of a disappointment to encourage a little short-covering, but not enough to resume a huge rally.

Furthermore, the average hourly earnings increase only matched expectations, which means it really didn’t contribute much to the high inflation scenario.

Another point to be made, volume was extremely light ahead of the Fourth of July holiday. This may mean we didn’t really see the true reaction to the data. We may not see it until next Tuesday or Wednesday. Additionally, we may see a choppy, two-sided trade until the Fed’s next meeting on July 27-28.