Gold prices edged higher after some traders bet that the slow pace of US hiring would discourage the Federal Reserve from effecting a rate hike until later this year.
The US Labor Department reported on Friday that nonfarm payroll additions for April were in line with analysts’ expectations but steep revisions to March data sparked optimism that weaknesses in the labor market would discourage the Federal Reserve from raising the lending rates.
“While the employment numbers are strong, the wage growth is disappointing,” Mike Meyer, a vice president at EverBank Wealth Management in St. Louis, told Bloomberg in a telephone interview.
“There is no wage inflation as of now, so the speculation about the timing of the rate hike continues.”
According to the report, the US added a seasonally adjusted 223,000 jobs in April while the March data was downwardly revised to 85,000 from the 126,000 reported earlier.
An interest hike would be bearish for non-interest yielding commodities like gold whose gains are mainly derived from price variations.
Gold for June delivery gained $6.70 or 0.42% to close at $1188.90 a troy ounce on the Comex division of the New York Mercantile Exchange. The US most active contract briefly touched an intraday high of $1193 an ounce immediately after the payrolls data.
Gold prices climbed 1.2% for the week to snap their weekly losing streak and break even for the year.
Spot gold added a modest 0.3% to $1,187.52 a troy ounce at the close of trading Friday.
“Trading in gold has been very choppy over the past 6 weeks with futures trading in a tight range between $1,180 and $1,210 as the outlook for [Federal Reserve] policy has become even more cloudy than it already was,” Tyler Richey, an analyst for the 7:00s Report, told Market Watch.
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