Gold and other dollar-denominated commodities fell as the dollar rose on strong wage growth figures released Friday, from December 2016’s jobs report.
Despite a slight increase in joblessness, with a rise from the 4.6% unemployment rate in November 2016, to 4.7% in December, wage growth propelled the dollar upward, reversing many of the losses it has sustained since the release of minutes from the Feds December meeting on Wednesday.
A strong dollar has made gold and other dollar-denominated commodities more expensive for holders of foreign currencies, translating into a 0.68% drop in gold today, at $1,170.94/ounce at 14:00 EST.
Other metals also experienced losses in the wake of the strong wage growth, however losses were less significant than those experienced by gold,with silver falling 0.81% and platinum falling 0.55% at 14:00 EST.
Gold had risen in trading sessions following the Wednesday release of minutes from the Feds December meeting, in which concern was expressed regarding the economic direction to be adopted by President-Elect Donald Trump,with ‘uncertainty’ playing on the mind of many decision-makers, who are considering the strength of the U.S. economy prior to making steps towards a potential interest rate rise.
Although the wage increase of 2.9% is moderate compared to previous years, the increase in wages has persuaded some analysts to speculate with increasing confidence the likelihood of a Fed interest rate rise in 2017, although such an opinion is widespread – the prediction of any time-frame regarding potential interest rate increases is a vague one indeed.