NEWS BREAK – Comex gold climbs higher after jobs report disappoints

Posted on August 2, 2013 by Tom Jennemann

New York 02/08/2013 – Gold futures whipsawed back above $1,300 on Friday after the US gained fewer jobs than expected in June.
Gold for December delivery on the Comex division of the New York Mercantile Exchange was last at $1,316.20 per ounce, a rise of nearly $30 on prices before the employment report was released.
The US added 162,000 jobs in June, missing expectations of 184,000. Still, the unemployment rate slipped to 7.4 percent, slightly better than the forecast of 7.5 percent.
“The markets are saying that the economy is not quite as strong as everyone thought it was yesterday. Basically, gold clawed back the losses that accrued following the [weekly unemployment] claims and PMI,” a US-based gold trader said.
“People who thought that the strong unemployment claims figure would translate to a strong non-farm reading as taking a pretty nasty beating this morning,” the trader added. “Those, like us, who stayed on the sidelines and think it’s silly to trade on this fickle and always revised number, are basically sitting in the same position we were on Monday.”
Yesterday, the July US PMI was 53.7 against a forecast 53.1, while fresh weekly jobless claims were a lower-than-expected 326,000, which was near a six-year low.
“Gold jumped, the dollar dropped and the base metals edged lower,” FastMarkets analyst William Adams said about today’s non-farm employment report. “This suggests the initial reaction is that the pressure for QE tapering is reduced after the data was released.”
“The data itself is quite mixed but the drop in unemployment rate, we think, is quite key; we are somewhat surprised the market has reacted the way it has although the unemployment rate is still a long way off 6.5-percent level that the Fed has highlighted. So maybe tapering will get off to a slower start than the market fears,” Adams added.
Gold prices often gain after weak data readings because the Fed has linked interest rates to labour market targets. The national non-farm unemployment rate will have to drop to 6.5 percent before the Fed moves rates up from the current exceptionally low level of 0-0.25 percent. During the decade-long bull run, gold’s biggest allies have been historically low central bank interest rates and quantitative easing.
As for wider markets, the euro gained 0.56 percent immediately after the release, climbing to 1.3272 against the dollar, while the most actively traded Comex copper contract was at $3.1785 per pound, up 1.25 cents.
In the other precious metals, Comex silver for December delivery was last at $19.955 per ounce, almost 50 cents higher than the pre-jobs report level. Trade has already been in a wide range of $19.245-20.015.
Platinum futures for October delivery on the Nymex was at $1,434.30 per ounce, down $9.50, and the September palladium contract was at $734.05, up $2.20.