Gold price jumps after U.S. jobs growth misses forecasts
San Francisco (Sept 2) Gold rose more than 1percent on Friday after U.S. jobs growth came in belowexpectations, dampening the likelihood of an interest rate hikefrom the Federal Reserve this month, but bullion pared gainsafter the dollar turned positive.
U.S. jobs increased by a slower-than-expected 151,000 inAugust, against expectations for a rise of 180,000. Still, Richmond Federal Reserve Bank President JeffreyLacker said the U.S. economy appears strong enough to warrantsignificantly higher interest rates. Spot gold jumped to a session high of $1,328.73 anounce after the non-farm payrolls data, and was up 0.7 percentat $1,322.36 by 2:20 p.m. EDT (1820 GMT). It was on track toclose the week up 0.15 percent.
U.S. gold futures settled up 0.7 percent at$1,326.70.
U.S. shares inched higher and European shares rallied afterthe data gave the Fed more leeway to stand pat on interestrates, while the dollar later turned higher and longer-datedTreasury yields edged up. "It remains to be seen whether gold can capitalize on thereprieve granted by today's rather ordinary payrolls," said TaiWong, director of base and precious metals trading for BMOCapital Markets in New York.
Gold is highly sensitive to rising U.S. interest rates,which increase the opportunity cost of holding non-yieldingbullion while boosting the dollar in which it is priced.
"The market was not expecting such a glum number from theU.S. ... it's evidence that the U.S. economy is still not strongenough to sustain another rate hike and that's positive forgold," said Jonathan Butler, commodities analyst at Mitsubishi.
"This number means rake hikes could get pushed further intothe future and gold will benefit from safe-haven buying andexpectations that the macro environment will continue to befavorable for even longer."
Many U.S. traders are expected to be away from their deskson Monday for the Labor Day holiday. "A slightly higher number would have almost guaranteed arate hike later this month but now the guessing game willcontinue," Ole Hansen, Saxo Bank analyst, told the ReutersGlobal Gold Forum on Friday.
Silver was up 2.5 percent at $19.31 an ounce, atwo-week high. Platinum rose 1.1 percent at $1,054.50while palladium gained 1.4 percent at $672.70