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Gold futures climbed on Friday as employment data from the Labor Department revealed that the U.S. economy created a lot less jobs than expected in September, making it less likely that the Federal Reserve will decide to taper bond purchases anytime soon.
The economy created only 194,000 new jobs in September to mark the second disappointing increase in a row. Economists polled by The Wall Street Journal had forecast 500,000 new jobs.
The nonfarm payrolls data “came back well below expectations…which suggests it may be harder for the Fed to taper than they would like,” Jason Teed, co-portfolio manager of the Gold Bullion Strategy Fund
QGLDX,
told MarketWatch. “This in turn could be a tailwind for gold, as lower rates are supportive of the metal.”
In Friday dealings, gold for December delivery
GCZ21,
GC00,
was trading $14.40, or 0.8%, higher at $1,773.60 an ounce, with the most-active contract for the precious metal headed for a weekly advance of around 0.9%, FactSet data show.
Meanwhile, silver for December delivery
SIZ21,
SI00,
added 41.7 cents, or 1.8%, to trade at $23.075 an ounce. For the week, gold’s sister metal is headed for a 2.4% rise.
Gold and silver’s advance this week has come against the backdrop of U.S. Treasury yields rising to their highs not seen in months, while the dollar been modestly stronger.
A stronger dollar and rising yields ordinarily undercut buying in bullion because strength in the currency can make the asset comparatively more expense to overseas buyers and government debt competes with precious metals, which don’t offer a coupon, for safe-haven bids.
After the monthly U.S. employment data, Treasury yields strengthened, but the dollar, as gauged by the ICE U.S. Dollar Index
DXY,
was down 0.1%, poised for a weekly rise of less than 0.1%.
The nonfarm payrolls data “made it clear that tapering isn’t necessary currently as the country’s labor market is still massively fragile,” said Naeem Aslam, chief market analyst at AvaTrade, in market update. “The data has broken the back of the dollar index and this pushed the gold price higher.”
“As for the equity markets, the feeble economic reading isn’t so much of good news but at the same time traders will find some comfort in the fact that Fed isn’t going to tighten their belt anytime soon,” he said.
Other metals traded on Comex moved higher. December copper
HGZ21,
added 1.2% to $4.294 a pound, trading roughly 2.5% higher for the week.
January platinum
PLF22,
rose 4.5% to $1,030 an ounce, poised for a weekly rise of 5.5%, while December palladium
PAZ21,
climbed by 4.7% to $2,046.50 an ounce, looking at a weekly rise of 7.5%.
