Gold futures are trading Friday shortly after the release of the US report on non-farm wages at 12:39 GMT. The report showed the impact of the coronavirus-induced economic shutdown that ravaged the US labor market in April to historic levels, reducing the number of workers by 20.5 million and driving the unemployment rate to 14, 7%, the Labor Department reported on Friday.
At 12:52 p.m. GMT, the June Comex gold futures traded at $ 1,713.70, down $ 12.10 or -0.70%.
Economists polled by Dow Jones expected wages to drop 21.5 million and the unemployment rate to rise to 16%. The unemployment rate for April surpassed the post-war record of 10.8%, but was below the peak of the Great Depression estimated at 24.9%. The peak of the financial crisis was 10% in October 2009.
The government report showed a more comprehensive measure that includes those who are not looking for work as well as those who work part-time for economic reasons also reached a record level of 22.8%. This reading may be a more accurate picture of the current employment situation, with millions of workers being paid to stay at home and therefore unwilling or unable to seek new jobs.
In total, the number of unemployed jumped to 23.1 million, a jump of 15.9 million compared to March.
As expected, the most affected sector was the leisure and hospitality sector, which lost 7.7 million workers, a total which included a drop of 5.5 million in food establishments.
Gold is probably weakening as the employment report contained few surprises. The weekly unemployment reports alone should have been enough to tell you that the non-farm wages report would report huge losses.
In addition, the Fed knew this and the government knew it, which is why they are launching monetary and budgetary stimuli for the economy respectively. This has already been assessed on the gold market.
If gold is falling, this will indicate that traders are reducing their positions as they observe that the restrictions have been relaxed in the hope of the start of an economic recovery. This tells me that in the short term, gold can be difficult.
In addition, traders will continue to monitor coronavirus numbers as they know that if the easing of blockages occurs too soon or if the Americans stop following the rules of social distancing, the coronavirus will reappear and the economy will again blocked.
This second wave of infections could be worse than the first, which would mean that the economy would need more stimulus money. As it is bullish for gold, the long term bullish trend would resume.