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Gold Futures Pare Early Losses After Tepid Job Data; Silver Prices Rise Sharply

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Gold futures pared deep losses to turn nearly flat on Friday after the U.S. Labor Department’s monthly non-farm payrolls report showed that the pace of hiring cooled off in July, which virtually knocks off the possibility of any immediate tapering of the bond purchase program by the Federal Reserve.  Spot gold prices, meanwhile, rallied after the jobs data. Silver prices also rose sharply in trading on Friday.

At last check, gold futures for December delivery were flat at $1,311 an ounce, while spot gold prices were up 1.9% to $1,282.69 an ounce.

Silver prices were last trading 2% higher at $20 an ounce.

Earlier today, the Labor Department said that the U.S. economy added 162,000 new payrolls falling short of economists’ forecast for 184,000.

The data immediately weighed on the U.S. dollar. The dollar index, a measure on greenback’s performance against a basket of six major traded currencies, fell sharply, making dollar-priced commodities cheaper for traders dealing in currencies other than the U.S. unit.

Commenting over the tepid job report, Douglas Borthwick, managing director, Chapdelaine Foreign Exchange in New York said, “The U.S. economy remains on a shaky foundation in terms of both GDP and employment. Until the foundation is strengthened, the Fed will be forced to continue its easing bias,” according to Reuters.

Bullion came under heavy sell-off pressure earlier this week after a spate of stronger-than-expected U.S. economic data releases fanned speculation that the Fed might start winding down its bond purchase program by September.

The metal’s inflation hedge appeal will diminish if the Fed decides to scale down its multi-billion dollar asset purchases. In other words, rampant currency printing (quantitative easing) stokes fear of currency debasement which in turn boosts the demand for inflation-hedge assets such as gold.

Meanwhile, holdings of the SPDR Gold Trust (ETF) (NYSE: GLD), the world’s largest gold-backed exchange traded fund, fell 0.7% to 921.05 tons on Thursday, showed a data provided by Reuters.

 

 








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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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