(Kitco News) - The gold market is seeing some robust selling pressure, with prices quickly dropping through initial support at $4,400 an ounce as the U.S. economy remains resilient, creating significantly more jobs than expected in August.
After a week of disappointing labor market data, optimism has come roaring back, with the U.S. Labor Department saying that 162,000 jobs were created last month. Employment gains beat expectations, as consensus forecasts had called for job growth of 55,000.
At the same time, the unemployment rate held steady at 4.1%, in line with market expectations.
The gold market has taken a dramatic hit in its initial reaction to the latest jobs numbers. Analysts note that the strong job gains last month give the Federal Reserve room to raise interest rates later this month.
Spot gold last traded at $4,385.80 an ounce, down nearly 2% on the day.
Kyle Rodda, Senior Financial Market Analyst at Capital.com, said that the door is open for a rate hike on Sept. 16; however, the CME FedWatch Tool shows that there is still only a 50/50 chance of a rate hike.
“The next hurdle is the coming week's inflation data. If that comes in a little too spicy, then based on Chairperson Kevin Warsh's Jackson Hole speech, a rate hike is likely to follow,” said Rodda.
Along with the solid headline number, the report noted solid revisions to the July and June data. June employment was revised up by 11,000 jobs to 31,000. Meanwhile, July employment was revised up to 21,000 from its initial reading of -23,000.
“With these revisions, employment in June and July combined is 55,000 higher than previously reported,” the report said.
At the same time, wages continue to improve, in line with expectations. The report said that average hourly earnings increased by 0.3%, or 10 cents, to $37.75.
“Over the year, average hourly earnings have increased by 3.1 percent,” the report said.
