Gold futures closed lower on Friday, reversing previous gains seen after U.S. Department of Labor employment data showed the U.S. economy created far fewer jobs in September than expected. The precious metal price had found support at $1,780 as fewer-than-expected jobs created last month made it unlikely the Federal Reserve would decide to cut bond purchases soon. Then it fell back to the levels of $ 1,757.
QGLDX executive: US jobs data could bolster gold
The economy created only 194,000 new jobs in September, marking the second disappointing increase in a row. Economists surveyed by The Wall Street Journal predicted 500,000 new jobs. Jason Teed, associate portfolio manager of Gold Bullion Strategy Fund QGLDX, said the nonfarm payrolls data came “well below expectations” and added: “…which suggests that it may be more difficult for the Fed to cut back on bond buying as it wishes. This could also be a boost for gold as lower rates support the metal.”
Oanda’s senior market analyst, Edward Moya, said in a market update that the gold price rallied to session highs after the data as the US dollar weakened and real yields “dipped further into negative territory.” However, after digesting the report, “gold investors quickly realized that the probability of a bond-buying announcement would still remain in November, and that pricing pressures were still high, which could dictate higher interest rates next year,” according to the analyst.
AvaTrade analyst: Data reveals that tapering of bond purchases is not necessary at this time
cryptocoin.com As we have also reported, gold and silver rose modestly around 15.00 CEST yesterday. This rise came amid a slightly stronger dollar, as US Treasury bonds soared to their highest level in months. A stronger dollar and rising yields normally reduce bullion buying, experts say, because the strength of the currency could put the asset at relatively higher expense to overseas buyers.
US Treasury yields strengthened after monthly US jobs data, while the dollar, measured by the ICE US Dollar Index DXY, fell less than 0.12%. Naeem Aslam, chief market analyst at AvaTrade, said in the market update the data on non-farm payrolls “make clear that it is not necessary to cut back on bond buying at this time, as the country’s labor market is still largely fragile.”
Head of Warwick Valley Financial Advisors: Gold shines in stagflation environments
Ken Ford, President of Warwick Valley Financial Advisors, said: “Disappointing employment data points to a slowing economy, but worse yet, the data shows a declining participation rate and on top of that, companies are forced to pay higher wages – this should increase investors’ fears of stagflation. “Gold is one of the few assets to shine in past stagflation environments.”
He believes that recent criticisms that gold isn’t a good inflation hedge are “unfounded” and that the precious metal has failed to gain respect even though gold prices have rallied by over 500 percent and recently by nearly 70 percent over the past 20 years.
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