U.S. Labor Market Remains Resilient: Can Gold Reach New All-Time Highs?

(March 7, 2025 - Niels Christensen, Kitco News)

(Kitco News) - The gold market is holding its ground above $2,900 an ounce and experiencing some modest buying pressure as the U.S. labor market loses some momentum, but not as much as some economists were expecting.

U.S. nonfarm payrolls rose by 151,000 in February, the Bureau of Labor Statistics reported on Friday. This figure slightly missed consensus forecasts, as economists had anticipated job gains of around 159,000.

However, the miss in the headline number was much less than some were expecting. Disappointing private sector payrolls data earlier in the week raised risks that the official jobs number would be a lot worse.

Further highlighting slowing momentum in the labor market, the unemployment rate increased to 4.1%, up from 4.0% reported in January. Economists were expecting to see an unchanged reading.

“If you look under the surface, there is more weakness than meets the eye here, and we're seeing some USD softening in the aftermath. That said, there were fears of a much worse number than this, so I'd classify it as a neutral report for the market,” said Adam Button, Chief Currency Strategist at Forexlive.com.

The relatively in-line employment data is not providing any new information for gold investors. Spot gold last traded at $2,922 an ounce, up 0.36% on the day.

Some analysts note that muted wage inflation could also limit gold’s gains in the near term. The report said that average hourly wages increased by 10 cents or 0.3% to $35.93 last month, in line with expectations. “Over the past 12 months, average hourly earnings have increased by 4.0%,” the report said.

Although the latest employment data has eased some recession fears in the marketplace, Thomas Ryan, North America Economist at Capital Economics said that the threat still remains.

“The modest 151,000 rise in non-farm payrolls in February and 0.1%-point rise in the unemployment to 4.1% confirms the economy started the year soft but is not plummeting towards a recession. Some of those fears may resurface in the March Employment Report, when recent federal government layoffs will be a much larger drag on employment than they were last month,” he said in a note. “But with private-sector hiring still running at a fairly healthy three-month average pace of 169,000, it suggests the labour market can handle it.”

Jamie Cox, Managing Partner for Harris Financial Group said that he is also expecting the labor market to cool through the year, which will force the Federal Reserve to cut interest rates.

“The transition from a reliance on government propping up the economy to allowing the market to stand on its own feet will be a little bumpy.  While strong, the jobs market will slow considerably with the government in cutting mode,” he said in a note.

Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, said that markets have breathed a sigh of relief as the employment data was not worse than expected; however, he added that economic uncertainty will continue to drive risk-off sentiment, which in turn could be positive for gold as a defensive asset.

“We’ve felt whipsawed by the on-again off-again tariff news, but we’ve largely held the same course as we began 2025 with: very cautious, risk-off and concerned about valuations and concentration. We’ve been counseling clients since the end of last year that 2025 was likely to be a volatile year because of policy uncertainty and so far, that’s exactly what we’ve seen,” he said in a note.