Gold futures benefitted from a forecast-missing August US employment report, which created doubts that the Federal Reserve can hike rates in a few weeks.
Gold for December settlement on the Comex division of the New York Mercantile Exchange gained $12.20 or 0.9 percent to $1,329.20 per ounce. Before the release, the contract was trading around $1,317 per ounce.
Spot gold was last trading at $1,325.05/$1,325.15.
Throughout August, 151,000 Americans joined the labour market, missing expectations of a 186,000 increase, while the employment rate was unchanged at 4.9. But the report wasn’t completely negative with average hourly earnings month-over-month ticking up 0.1 percent, a touch below the 0.2 percent estimate. Lastly, trade balance in July came in at -39.5 billion, besting economic consensus of -43 billion.
The report had garnered significant attention after last week’s Fed symposium in Jackson Hole, Wyoming. Chairwoman Janet Yellen and her top official, Stanley Fischer, both reiterated that the economy was on pace for its eighth year of expansion and a near-term rate hike could be appropriate.
But today’s jobs report dampened those expectation slightly – the prediction markets don’t see another Federal Funds increase till 2017.
“It would require a pretty solid case to raise interest rates before the Presidential election. And this number isn’t a strong enough for the Fed to charge ahead before the vote,” Former Obama economic advisor Austan Goolsbee said in CNBC.
The policy-board has been contending with a dour macroeconomic backdrop stemming from the July UK referendum vote to leave the European Union. Furthermore, an ability to generate inflation has created long-term concern over the health of US consumers with retail sales, consumer sentiment and family expansion are lagging behind previous recovers.
Still, in comparison to the European Union, Japan and China, the US economic stability stands in stark contrast to futile attempts to spark inflation or stabilise growth.
Meanwhile in paper holdings, exchange-traded-funds saw continued outlflows overnight, falling 4.7 tonnes to 2,101 tonnes total. Holdings had hovered around a three-year high over the past few weeks, but short-covering interest had eroded before the release, allowing an opportunity for dip buying.
“Precious metals could surprise to the upside today. Investors seem to have built some short positions across precious metals since the start of the week on expectations of a stronger US jobs report, reflected in the stronger expectation of a Fed move in September,” FastMarkets analyst Boris Mikanikrezai said.
“But given our view that the Fed is unlikely to raise rates in September even if US jobs numbers are robust because of rising downward risks to the inflation outlook, a short-covering rally may develop once the market starts to revise lower the probability of a Fed rate rise in September,” he added.
Later in data, factory orders are due for release.
Turning to European markets, Germany’s DAX and France’s CAC-40 were up 0.4 percent and 0.9 percent respectively, while the dollar softened 0.3 percent to $1.1227 against the euro.
As for other precious metals, Comex silver for September delivery jumped 39.8 cents or 2.1 percent to $19.255 per ounce. Trade has ranged from $18.780 to $19.295.
Platinum for October settlement rose $12.60 or 1.2 percent to $1,061.50 per ounce, while the most active palladium contract stood at $669.30 per ounce, up $8.05.
(Editing by Tom Jennemann)
The post Gold reacts favorably to mixed US jobs report appeared first on The Bullion Desk.
Read More
Source: Bullion Desk News
