Gold shines on lacklustre US jobs data

Date

10/3/2015 11:33:18 PM

(MENAFN- Khaleej Times)

Gold seen as a haven investment rallied on Friday as weaker-than-expected US jobs data weighed on the dollar.

The precious metal which had fallen for most of the week shot higher as the poorly-received employment figures meant that the Federal Reserve was unlikely to kick-start before the end of the year a campaign of raising US interest rates according to analysts.

"Gold prices soared coming off a five-day losing streak and erasing losses from the past three days... on the reduced chance of a US rate hike following the surprise deceleration in US job creation" noted Jasper Lawler an analyst at trading group CMC Markets.

By Friday's late fixing on the London Bullion Market an ounce of gold traded at $1140.75 an ounce up from $1119 on Thursday. Gold was however down over the week having finished at $1146.65 an ounce the previous Friday.

The US job market faltered in September and hiring in prior months was slower than thought the Labour Department said on Friday in a report pointing to a slowing economy.

The September jobs report gave a downbeat picture of the jobs market as the Federal Reserve considers its first interest-rate hike in more than nine years and suggested the economy was being impacted by concerns about China's economic slowdown which has roiled financial markets in recent months.

US jobs growth came in at 142000 jobs in September well below analyst estimates of 205000. The data weighed on the dollar making commodities prices in the US unit such as gold cheaper for holders of rival currencies boosting demand. In late European trading the euro jumped to $1.1263 up from $1.1187 late on Thursday in New York.

Gold is generally seen as a haven investment in times of economic uncertainty although the precious metal has come under heavy pressure as the dollar strengthened on expectations of a US rate hike.

"The disappointing US jobs report for September will clearly do little to improve investor confidence in the global economy" said Melanie Debono at research group Capital Economics.

"Yes it will probably delay the first interest rate hike from the Fed until early next year... In the meantime the few winners include safe-haven government bonds and gold." Friday's respite comes as gold has been hit also by weaker demand from China the world's second biggest economy after the United States. Looking ahead however and according to Fawad Razaqzada analyst at dealers Gain Capital "a pickup in inflation should boost the appeal of gold". This is because gold is seen as a good store of value amid rising prices for goods and services.

The Federal Reserve has repeatedly said it wants to see more indications of tightening in the jobs market and prices before it begins moving interest rates higher toward a more normal policy stance. - AFP

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.