Gold falls for 7 weeks after disappointing jobs data

Gold prices were higher on Friday morning, after US job growth fell short of expectations.

November US payrolls data showed an increase of 210,000 jobs, compared with expectations for a 573,000 gain and a 531,000 gain in October.

The most active February Gold contract rose 0.5%, or $8.50, to $1,771.20 an ounce after climbing near $1,780 during session. On Thursday, Gold fell 1.2% to $1,762.70 an ounce on Comex.

Gold falls for 7 weeks after disappointing jobs data

Gold and Silver both declined possibly due to Omicron variation

During the week, price of gold traded on contracts traded 0.9% lower.

Meanwhile, Silver in March fell 0.3% to $22.26/oz, poised to drop about 3.5% on a weekly basis, after Institute of Supply Management’s services index showed a rise to 69. .1% higher than expected in November, from 66.7% in October.

Investors continue to watch for updates on Omicron variant that were noticed by South African scientists last weekend and this caused tumultuous days in market. Gold has disappointed investors in recent days, who were hoping precious metal would attract haven and reclaim psychologically important $1,800 level.

Craig Erlam, senior market analyst at OANDA, in a note to clients:

“Of course, there are many factors related to Gold but reality is that central bank is in a bind if news of Omicron variant, may not be as bullish for Gold as it used to be. Unless, of course, central bank prioritizes economy over inflation that would be a big risk.

Among other metals traded on Comex, March copper fell 0.4 percent to $4,282 a year, leading prices down about 0.2 percent on week.

January platinum lost 0.1% to $932.30 an ounce, with prices trading 2.3% lower for week, while March Palladium gained 1.9% to $1,804.50 an ounce, on track weekly increase of more than 1%”.

Shortage of workers

“When today’s big jobs report comes out, labor force participation rate will get as much attention as headline number. Economists are looking for an increase of 550k nonfarm payrolls for November, right in line with what ADP reported on private sector employment. That would produce more evidence of substantial progress on labor front that Fed is headed, but not breakout month in worker return.

Chairman Powell … expressed surprise that the trend of participation remained flat, which remains biggest risk to the medium-term inflation story,” he added. “If participation does not increase, supply/demand imbalance for high-volume labor will continue to linger and the Fed will likely have to raise rates three or four times over the next year.

The labor force participation rate is at 61.6%, stable over the past 2 months and has not really changed this year. There are 3.1 million fewer workers than there were before the pandemic, and Wells Fargo estimates 1 million more workers would have entered the workforce if the pandemic had not occurred.

The labor participation rate of the elderly has decreased

No return: The labor participation rate of people over 65 has plummeted and there has been almost no improvement through pandemic and recovery. Wells Fargo economists Sarah House and Karl Vessely wrote in a note: “The participation rate of elderly is falling as ranking of this age group rises.”

Many people have already retired and that becomes a major barrier to labor market as only a small fraction of retirees return to workforce and retirees are 1 year likely to return to work. /5 compared to those who do not want a job for other reasons.

Look for bottom line:

Women aged 25-54 are largest group of workers missing, and childcare is main cause. At same time, employment in day-care centers is down 10% from pre-pandemic levels, and recovery will be difficult as labor is industry’s biggest cost by far, making it difficult to raise wages. more while competitive sectors still do, Wells Fargo noted.

This cut-off point may be closest to young workers. In contrast to previous downturn, where young labor market remained active and enrolled, overall college enrollment in Fall 2021 fell for second year in a row.”

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