Gold News

Gold roars back after strong US jobs data; action to support the Dollar "still lacking"

From Chris Mullen at

Gold Prices traded slightly lower in Asia and London on Friday before dropping nearly $10 in New York after better than expected US jobs data initially pushed the Dollar higher.

Non-farm US payrolls grew by 110,000 in Sept. according to the official data. But the Bureau of Labor Studies adjustment added 17,000 payrolls. August jobs were revised up to a gain of 89,000 from the previous 4,000 losses reported.

The US Dollar index then fell off, however, and ended the day lower in an apparent resumption of its long-term downtrend. Federal Reserve member Kohn commented that we should expect further near-term weakness.

The Gold Market roared back as high as $743.60 before it eased into the close and ended the day with a gain of 0.57%.

Consumer credit reported for August jumped to $12.2 billion from July's $9.6bn. Wall Street analysts had forecast $8.6bn.

Silver on Friday followed a similar pattern to Gold Prices, falling as low as $13.227 before it shot up to $13.483 and then also moderated a bit into the close, but it still ended with a gain of 0.15%.

For the week, Gold Prices ended 0.25% down against the Dollar, while Gold Prices in Euros rose above €525 per ounce. Platinum gained $5 on Friday to $1370, palladium gained $5 to $367, and copper fell slightly to about $3.73.

Gold and silver mining equities steadily rose throughout most of trade and ended with about 2% gains. Crude oil fell on profit taking and concerns over waning demand, but it did end well off its lows and still above $81 per barrel.

The Dow rose back above 14,000, the S&P rose to a new record high, and the Nasdaq rose to a new six-and-a-half year highs on hopes that the jobs data indicates the US economy is recovering nicely from the credit problems and recessionary fears that began in August.

Among the big names making news in the market Friday were Research in Motion, Barclays and ABN, Goldman, Aetos, Simplex, and Washington Mutual.

"The Gold Price behaved impressively [this week] after being knocked down to $723, then running up to over $737, then back down only to finish at close to the days high," says Julian D.W. Phillips of The Gold Forecaster.

"This made it clear to funds and dealers who were probably the culprits on the down side that investment buying is still strong, as is shown by the tonne a day investment buying at the moment.

"With HSBC now warning of massive capital outflows from the United Kingdom, and UK investors pouring into the exchange-traded gold fund there (LyxO GBS), could matters go back to the Exchange Controls seen there in 1971 to prevent further outflows? This would certainly benefit the Gold Price.

"There has been a massive degree of support for the Dollar as it bounced back to what was support but is now resistance. We suspect that this was just a rally. Uncertainty appears likely to persist in many quarters of the financial world with confidence being the victim.

"There is little sign of the actions needed to structurally improve prospects for the Dollar, so we see no reason why gold and silver should not continue to rise."

Next week’s economic highlights include Fed interest-rate meeting minutes on Tuesday, Wholesale US Inventories on Wednesday, Export and Import Prices, Initial Jobless Claims, and the Trade Balance and Treasury Budget on Thursday, and Retail Sales, PPI, Business Inventories, and Michigan Sentiment on Friday.

Monday is a holiday in both the US and Canada, but the stock market will be open for business.

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Adrian Ash

Adrian Ash, BullionVault Gold News

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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