With more individuals not willing to work for the current low-wage hourly rate and federal money flooding households, the price of gold may soon increase. A recent BLS Employment Situation Report shows that last month, total nonfarm payrolls increased by more than 550,000 after increments of more than 270,000 in April.
Concurrently, the U.S. economy introduced fewer jobs than had been expected, with economists polled by MarketWatch predicting just over 670,000 additions. Furthermore, while employment-population and labor force participation rates were moderately altered, they remained below levels observed prior to the pandemic.
On the plus side, the unemployment rate dropped to 5.8% from 6.1% and the number of unemployed individuals also decreased significantly from the high number recorded in April last year. Among the major worker groups, the unemployment rates decreased for Hispanics by more than 7%, whites by a little more than 5% and teenagers by more than 9%. However, the number is still higher than the numbers observed prior to the pandemic.
Last year in February, 5.7 million individuals in America were unemployed. Currently, the number is a little more than 9 million, which means that the labor market is yet to recover fully.
The decrease in the rate of unemployment was brought about by a decline in the labor participation rate, with many workers leaving the labor market. This explains why employers reported shortages in workers despite the high numbers of unemployed individuals.The Fed’s Beige Book noted that most firms had difficulties finding new employees, which led them to increase their wages in order to attract candidates.
The situation report, which is a plus for the gold market, also stated that the increasing demand for labor as the economy recovers from the pandemic may have pressure on wages, which can be seen in the rate, which rose to 2%. The increase in wages creates a good environment for the yellow metal, which may carry on with its upward trend.
In addition to this, the disheartening employment situation will put off diminishing the Fed’s quantitative easing, which will in turn leave real interest rates at current low levels, which supports the price of gold.
Estimates show that even if improvements are recorded later in the year, it will take a few months to fully get rid of the slack in the labor market. Investors interested in or holding stocks in precious metals should not look forward to a change in the Fed’s position in the coming months.
Companies in the gold value chain, including GoldHaven Resources Corp. (CSE: GOH) (OTCQB: GHVNF), are likely to benefit from this bullish trend that gold is displaying.
NOTE TO INVESTORS: The latest news and updates relating to GoldHaven Resources Corp. (CSE: GOH) (OTCQB: GHVNF) are available in the company’s newsroom at http://ibn.fm/GHVNF
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