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US Jobs Growth Report Pushes Gold up to 2-Month High

Jobs Growth
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EDITOR NOTE: At the Fed’s Jackson Hole Symposium, chairman Jerome Powell said that the central bank wants to start tapering, raising interest rates, and pulling back on all the pandemic-driven QE policies, but it has to wait until the jobs situation gets better. The Department of Labor just released the August job numbers, and they are not looking good. Labor predicted 733,000 new jobs in August but added just 235,000. Unemployment did dip slightly (from 5.4% to 5.2%) but it’s still nowhere near the 4% or lower the Fed needs to start moving. This means the money printing and inflated markets will continue for now until the jobs report suddenly gets better or the bubble finally bursts. - Gold prices hit a two-month high and rose for a fourth week in a row after shockingly low U.S. jobs growth in August brought a rush of money into the yellow metal from those betting that the Federal Reserve won’t be able to taper right away the stimulus it has been providing the Covid-hampered economy.

The U.S. Labor Department reported on Friday that employers added 235,000 jobs in August, less than a third of the forecast 733,000, amid continued struggles with the coronavirus pandemic. The only consolation was the August unemployment rate improving to 5.2% from July’s 5.4%.

Prior to the release of the August job numbers, there had been rife speculation that the Federal Reserve, which has been buying $120 billion in bonds and other assets since the Covid outbreak in March last year, will taper some of its lifeline to the economy. The central bank has also been keeping interest rates at virtually zero levels for the past 18 months.

The Fed’s Federal Open Market Committee, or FOMC, meets September 21-22 to decide on rates and other policy matters.

“This dooms the chance of a September taper announcement and may even take (the) chance of a taper hint off the table,” economist Adam Button said in a post on ForexLive.

Going forth, Button also noted that the Fed will only get one other jobs report before the November FOMC meeting. “So this considerably dims the chance of a November taper announcement.”

Front-month gold on New York’s Comex settled up $22.20, or 1.2%, at $1,833.70 an ounce. It earlier hit a June high of $1,836.80. For the week, Comex rose 0.8%, gaining for a fourth week in a row.

The Fed thinks growth will average at 6.5 percent for all of 2021. But Chairman Jerome Powell also says it may take a while for "full employment" — defined by a monthly unemployment rate of 4.0 percent or lower — to occur. The monthly unemployment rate stood at 5.4 percent in July.

At the Fed’s all-important Jackson Hole Symposium last week, Powell declined to set any timetable for the tapering, saying the central bank will be guided by the jobs growth, the economy and progress from the pandemic.

More than a year into the Covid-19 crisis, restoring job growth remains one of the main concerns of U.S. policymakers.

The United States lost more than 21 million jobs between March and April 2020, at the height of business lockdowns forced by the coronavirus. More than 7 million of those jobs have yet to return, officials say.

The U.S. economy itself shrank 3.5% in 2020. This year though, growth has been quite dynamic, with a 6.5% rebound for the second quarter though that was still below the 8.5% expected by economists.

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