Gold futures climbed on Friday, with a lower-than-expected increase in new jobs last month prompting prices for the precious metal to turn higher for the week.
The disappointment in the nonfarm payrolls data “can not be underestimated and will give the [Federal Reserve] additional rationale to push back an effort to taper asset purchases,” Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch.
Gold is moving higher on this anticipation, and among the next big economic data points will be the producer-price index, he said. That is due out next Friday.
“Gold has found good support above $1,800 and built a solid base there,” said Wright.
December gold rose $13.70, or 0.8%, at $1,825.20 an ounce, after a 0.3% decline on Thursday. For the week, gold is on track for a 0.3% rise, based on most-active contract, according to FactSet data.
Gold moves have been mostly tied to the vagaries of the dollar and yields for U.S. government debt and the greenback edged lower after the U.S. jobs report Friday.
The economy created a small 235,000 new jobs in August amid another major coronavirus outbreak. The increase was the smallest in seven months and fell well short of the 720,000 rise forecast by economists surveyed by The Wall Street Journal.
The number “missed the expectations by a huge margin,” wrote Naeem Aslam, chief market analyst at AvaTrade in a daily note. “The U.S. labour market still has a long way to go to recover the lost ground.”
The dollar index has fallen, boosting the gold price, he said. The ICE U.S. Dollar Index fell by 0.1% to 92.099, trading down 0.6% for the week.
“It is clear that the dominant trend for the gold price is going to the upside,” said Aslam. “Given the fact that the market is addicted to loose monetary policy, the Fed is unlikely to tighten their monetary policy belt.”
In a market update, Fawad Razaqzada, market analyst at ThinkMarkets, said the jobs data is clearly weaker than expected, but isn’t likely to be a “game changer insofar as the Fed’s policy is concerned.”
“Thanks to the past sharp improvement in U.S. jobs data, I reckon the Fed is still on course to announce the timeline for tapering [quantitative easing] at the November meeting.”
This outlook will “only change if the upcoming jobs reports for September and October disappoint badly,” said Razaqzada.
On Comex, silver for December delivery gained 58.2 cents, or 2.4%, at $24.50 an ounce. For the week, silver was looking at a weekly advance of 1.7%.
December copper also moved up by 0.6% to $4.33 a pound, trading little changed for the week. October platinum added 1% to $1,003.70 an ounce, poised for a weekly loss of around 0.2%. December palladium traded at $2,399 an ounce, down nearly 0.1% in Friday dealings, with prices on track for a weekly decline of 0.4%.
Source: Marketwatch