Gold Rush to Six-Month High on US Jobs Data Posted by Adam King on September 07, 2012
September 7, 2012 – The price of gold rushed to a six-month high on Friday, near $1,730 per troy ounce following the release of U.S. jobs data that indicated growth had slowed more than expected in the month of August, adding more reason to the expectations that the Federal Reserve will respond with additional quantitative easing.
Nonfarm payrolls increased by only 96,000 in the last month, giving gold bulls and offensive edge.
The report was augmented by revisions to the June and July payrolls data, which indicated that 41,000 fewer jobs were created than were previously reported.
The spot price of gold gained with a weaker dollar, reaching $1,726.65 per troy ounce, the strongest price in gold since late February of this year.
Daniel Briesemann, commodities analyst with Commerzbank in Frankfurt, points out that this movement in gold is mainly because the negative economic data makes QE3 more likely.
Briesemann believes there is a chance Ben Bernanke could announce QE3 as early as next week, making gold the best investment to hedge the inflation that is feared to be a byproduct of the fiscal stimulus.
On Thursday, gold hit its highest levels since early March following the European Central Bank’s unveiling of a new and potentially unlimited bond purchasing program intended to lower borrowing costs in heavily indebted countries.
Central bank intervention in the form of monetary stimulus puts a lot of attention on the gold market as investors seek a hedge against the possibility of rising prices.
VTB analyst AndreayKryuchenkov said investors are now betting on a weaker dollar or a potential QE3, possibly even extended rate guidance into 2015, being announced from the Fed next week.
In other precious metals, silver took a similar tack to gold, reaching the highest levels since mid-March at $33.36 per troy ounce.
Platinum also gained to $1,590.74 per troy ounce with much of the market attention still focused on the production problems in South Africa.
The third-largest platinum miner is experiencing a four-week strike at the Marikana operations, which has included violence and the loss of lives, though the company signed a “peace deal” with some of its unions on Thursday.