Gold News

Gold Price Jumps $25 in 15 Minutes After 2nd Weakest US Jobs Data in 18 Months

GOLD PRICES jumped almost $25 in 15 minutes on Friday after new US jobs data said non-farm payrolls grew much less in September than analysts forecast.
 
Western stock markets slashed earlier strong gains but US Treasury bonds leapt, driving the yield on 10-year debt down to 1.95% – the lowest level since April.
 
Adding 142,000 for last month, the US government's non-farm payrolls estimate badly missed consensus predictions of 203,000 with the second lowest addition in 18 months.
 
The US Dollar dropped over a cent against the Euro on the FX market following the news, while gold rose 1.9% to $1134 per ounce – recovering two-thirds of the week's earlier losses.
 
Silver rose twice as fast to reclaim all but 10 cents of this week's drop and edging just above $15 per ounce – a new 6-year low when broken decisively this summer.
 
"I expect that we'll reach our maximum employment mandate in the near future and inflation will gradually move back to our 2% goal," said San Francisco Federal Reserve Bank president John Williams – known as a 'centrist' rather than a 'dove' or 'hawk' on raising rates – in a speech Thursday.
 
"In that context, it will make sense to gradually move away from the extraordinary stimulus that got us here." 
 
Today's jobs data held the US unemployment rate unchanged at 5.1%.
 
US consumer price inflation was last seen at 0.2% per year on August's official data.
 
With two Fed meetings now left before 2016, Williams yesterday repeated earlier comments that he expects the Fed will vote to raise rates after 7 years at 0% "sometime later this year."
 
"The prospect that the turn in the US monetary cycle is still imminent," says a new note from precious metals analyst Robin Bhar at French investment bank and bullion market maker Societe Generale, "remains central to our view that we remain bearish for the yellow metal."
 
"Our view is still that the Fed will hike in December," says FX strategist Steven Barrow at investment and bullion bank ICBC Standard Bank.
 
"[But] if economic data, like payrolls, start to peel back, perhaps in response to weaker export orders, the Fed might be forced into believing its rhetoric from September, that overseas factors should stall lift-off."
 
Ahead of Friday's weak US jobs data, Dollar gold prices had been on track for their sharpest weekly in almost 7 months according to Bloomberg data.
 
"A strong print," the Wall Street Journal this morning quoted Swiss bank and bullion market maker UBS's precious metals analysts, "holds downside potential for gold.
 
"The risk [was] that there may be limited immediate support as participants in India are out today for a public holiday while participants in China have been out from yesterday for the Golden Week."

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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