Gold recovers from 6-week low

London (Aug 2)   Gold rose 1 percent a day after touching a six-week low as US payrolls data missed expectations, dampening talk of an early interest rate rise by the US Federal Reserve and pressuring the dollar.

A string of upbeat reports on the US economy, including signs of an improving job market, helped gold to its biggest monthly loss this year in July, with prices falling 1 percent on Thursday.

They clawed back lost ground, however, after data showed US job growth slowed more than expected last month and the unemployment rate rose, pointing to some slack in the labor market that could give the Fed room to keep interest rates low.

That would keep the opportunity cost of holding gold versus higher-yielding assets low.

Spot gold was up 1 percent at $1,294.10 an ounce at 1347 GMT, off Thursday’s six-week low of $1,280.76. US gold futures for December delivery were up $12.30 an ounce at $1,295.10.

Gold prices remain up 6.6 percent this year, but the bulk of those gains were made in the first quarter. The metal fell 3.4 percent in July, its biggest monthly drop of 2014.

Data released on Friday showed nonfarm payrolls increased 209,000 last month after surging by 298,000 in June, while the unemployment rate edged up to 6.2 percent from 6.1 percent.

Demand for physical gold in Asia failed to pick up in a robust way despite the price drop on Thursday, a dealer in Hong Kong said.

Metals consultancy GFMS, a division of Thomson Reuters, warned earlier that buying in the main physical gold markets of China and India may not be strong enough to provide a floor for prices this year. (Full Story)

“Strong physical demand from Asia, especially China, arguably supported gold prices from falling further last year,” GFMS analyst Sara Zhao told the Reuters Global Gold Forum.

Source: ArabNews