Investors saw U.S. gold prices climb on Friday, poised for their largest weekly gain since January, even as official reports indicated a shrinking labor force and persistent struggles for the long-term unemployed. Spot gold rose 0.4% to $4,254.11 per ounce, hitting a seven-week high in the previous session. Prices were up over 5% for the week, reflecting capital's response to shifting economic signals.
U.S. gold futures gained 0.3% to $4,312.00 as traders focused on the Labor Department’s July employment report. Market participants braced for the report, which Reuters said would likely show U.S. job growth picked up in July and the unemployment rate remained unchanged. AP News described the U.S. job market as "pretty stable" this year, with "solid if not spectacular" hiring after a lackluster 2025. Yet, this stability masks deep contradictions.
Layoffs are low by historical standards, and one week in July saw unemployment benefit filings drop to a 50-year low. The jobless rate fell to 4.2% in June, its lowest in a year, and was expected to hold there. However, the same reports reveal a stark reality for those outside the official count. In May, 27.5% of the unemployed had been out of work for six months, the highest share in four and a half years, a figure that dipped only slightly in June.
Who Profits from Scarcity
Companies, government agencies, and nonprofits were expected to add nearly 98,000 jobs in July, an improvement from the 57,000 jobs created in June. This comes after 2025 saw fewer than 10,000 new jobs a month, the weakest hiring outside a recession since 2002. Employers have added an average of 92,000 jobs a month so far in 2026, a rate that barely keeps pace with population growth, especially given the state's active role in shaping the labor pool.
The United States doesn't need as many jobs as it once did to prevent unemployment from rising. This is partly due to President Donald Trump’s immigration crackdown, which reduces the available labor supply, and the ongoing retirement of baby boomers. A Federal Reserve study noted the break-even rate of monthly hiring, 155,000 in 2023-2024, has dropped, perhaps to nearly zero. This engineered scarcity benefits employers by limiting worker leverage.
Sal Guatieri, senior economist at BMO Capital Markets, observed, “There are just fewer people available to hire.” He acknowledged that "labor shortages translated into higher wages for some workers." Payroll processor ADP reported that job changers last month pocketed a 7% raise, the biggest year-over-year gain in almost a year. This premium far outstripped the 4.4% increase for workers who stayed in their positions, highlighting a system that rewards mobility over loyalty. Guatieri also stated, “We are seeing companies produce more with their current staff,” adding, “So there’s less need to take on new workers.” This increased productivity without commensurate hiring represents a direct extraction of surplus value from the existing workforce.
The State's Role in Wage Suppression
The outlook for hiring remains clouded by the ongoing fighting in the Persian Gulf, which has pushed up energy prices and squeezed family budgets. The rise of artificial intelligence also looms, threatening to either make workers more efficient or eliminate their jobs entirely. These external pressures further justify wage suppression for capital.
The June jobs report revealed 720,000 people dropped out of the labor force, with 700,000, or 97%, of them aged 25 to 34. A smaller labor force means fewer people competing for work, which can artificially lower the unemployment rate. This demographic shift, whether statistical quirk or structural trend, serves to mask the true extent of underemployment.
Researchers Ingrid Chen, Marianna Kudlyak, and Riva Mikhlin of the Federal Reserve Bank of San Francisco found that landing a job had gotten tougher in the past couple of years. They wrote, “Instead of being pulled in, the pipeline into employment is shrinking such that the recovery is no longer reaching workers at the margins.” They suspected the difficulty might stem from the immigration crackdown, hiring slowdowns at tech companies and government contractors, policy uncertainty, or "early signals of broader labor market deterioration."
Federal Reserve Bank of St. Louis President Alberto Musalem favored a boost in short-term borrowing costs. He argued that “earlier gradual incremental interest rate increases are preferable, less disruptive, less costly than potentially later, more abrupt interest rate changes.” This focus on managing interest rates prioritizes the stability of capital markets over the material conditions of the working class. Gold, silver, and platinum all headed for weekly gains, demonstrating where the system's true priorities lie.