Labor market resilience supports gold near key level
The gold market continues to test support around $4,300 an ounce, attracting modest bullish interest as the U.S. labor market remains resilient but shows clear signs of cooling. Investors are weighing steady job creation against rising unemployment and weaker wage growth.
November jobs beat forecasts but trend weakens
After another delay in publication, the U.S. Labor Department reported that 64,000 jobs were created in November. The figure exceeded expectations of 51,000 new jobs, offering reassurance that hiring momentum has not stalled completely.
However, economists emphasized that the broader trend points to slowing conditions. The unemployment rate rose to 4.6% from 4.5%, defying expectations for an unchanged reading. No employment data were released for October due to the 43-day government shutdown, further complicating trend analysis.
Revisions highlight softer employment picture
Revisions to previous months reinforced concerns about underlying labor market weakness. August employment was revised to show a loss of 26,000 jobs, compared with an earlier estimate of a 4,000-job decline. September job growth was also revised lower, falling to 108,000 from 119,000.
Gold volatile after data release
Gold prices reacted with brief volatility following the mixed employment report. Spot gold last traded at $4,307.40 an ounce, little changed on the day, as traders balanced expectations of future rate cuts against near-term U.S. dollar movements.
Wage growth misses expectations
Adding to the cautious outlook, wage growth came in weaker than expected. Average hourly earnings rose just 0.1% in November to $36.86, compared with a 0.2% increase in September. Economists had forecast a 0.3% rise.
This marked the slowest pace of wage growth since March 2024, easing inflation concerns and altering expectations for monetary policy.
Fed rate cuts still on the table
Despite ongoing job creation, analysts said the data are unlikely to prevent the Federal Reserve from cutting interest rates next year. Markets are currently pricing in three potential rate cuts in 2026.
Lower interest rates typically support gold by reducing the opportunity cost of holding a non-yielding asset, though weaker inflation signals may limit upside in the short term.
Analysts warn of near-term downside risks
Aaron Hill, chief market analyst at FP Markets, said subdued wage growth creates a short-term headwind for gold as an inflation hedge.
“Gold around $4,290 to $4,300 faces renewed downside pressure from the wage miss reducing inflation fears,” Hill said, adding that prices could test lower levels if U.S. dollar strength persists.
Chris Zaccarelli, chief investment officer at Northlight Asset Management, said the Fed is likely to continue easing policy, but its response will depend on how it balances labor market risks against inflation that remains above the 2% target.
