(Bloomberg) — Gold rebounded, paring a weekly decline as a smaller-than-expected gain in U.S. payrolls helped ease concerns that the Federal Reserve will pull back stimulus.
Payrolls increased by 559,000 last month, according to a Labor Department report Friday. The median estimate in a Bloomberg survey of economists was for a 675,000 rise. The dollar and Treasury yields initially dropped after the report. The weaker dollar also helped copper extend gains on the London Metal Exchange.
Gold has wobbled after jumping the most in 10 months in May on concern that faster economic growth would spur inflation that leads governments and central banks to withdraw support. While U.S. hiring accelerated in May, the gains probably aren’t enough to push the Federal Reserve to alter their policies sooner, said Naeem Aslam, chief market analyst at Ava Trade.
“Today’s number has confirmed the Fed’s current thesis about their monetary policy, and it is very clear that now the pressure is off,” Aslam said in an emailed note. “The fact that the Fed is likely to keep their monetary policy unchanged is helping the gold prices today.”
Gold and silver rose on the jobs report while Bitcoin and Ethereum fell AHEAD of the jobs report. The US Dollar fell to yesterday’s levels.
Nonfarm jobs added are above pre-Covid levels, but labor force participation rate dropped to 61.6%, far lower than the rising participation rate before Covid. Likely, this is the adverse effect of Biden’s Covid stimulus efforts (delaying entrance into labor market, despite growing jobs availability).
Job openings are BOOMING, yet labor force participation remains below pre-Covid levels.
Of course, the biggest job gainer was food services and drinking places. Notice that this sector is trying to recover from the government lockdowns and is only back to 2014 levels.
This chart from The Federal Reserve of St Louis shows decline in Labor Force Participation and the largest job gainer in the jobs report, food services and drinking places.
Government Covid lockdowns are out of The Fed’s realm, that is keeping rates at near zero has nothing to do with state and local mask mandates and shutdowns).
Why have central banks gone ballistic purchasing assets since the global financial crisis of 2008-2009?
On the great/lousy jobs report (depending on how you read it), the 10-year Treasury yield tanked.
I think Biden means that states dropping Covid lockdowns and mask mandates helped the hiring of restaurant workers and bartenders. Still far below pre-Covid levels.