Gold rises as weak US job data rekindles Fed stimulus hope
Gold rose on Friday after data showed US job creation slowed sharply over the past two months, fuelling speculation that slowing economic momentum will force the Federal Reserve to keep its current stimulus.
For the week, gold was up almost 2 per cent for its largest weekly gain in five weeks, boosted by safe-haven demand driven by tumbling currencies and assets in emerging markets.
Bullion, however, failed to hold on to highs hit earlier Friday after US non-farm payrolls rose only 113,000 last month after a meagre 75,000 gain in December.
The metal's rise was limited by an over 1 per cent rally in the S&P 500 equities index as expectations of further economic strength more than offset the weak reading on the labour market, which was blamed partly on the weather.
"The payroll numbers are certainly weak, and I don't think the Fed can afford to change its current monetary stimulus policy," said Frank McGhee, head precious metals dealer at Chicago commodities brokerage Alliance Financial LLC.
"Gold's gains are hanging on hopes that the Fed will back off from tapering, but it is still vulnerable to a sell-off in the near term," McGhee said.
Spot gold rose as much as 1.2 per cent to $1,271.70 an ounce, near its two-month high, after the job data.
It was up 0.8 per cent at $1,266.75 an ounce by 3:19 p.m. EST
US COMEX gold futures for April delivery settled up $5.70 at $1,262.90 an ounce, with trading volume about 20 per cent finish below its 250-day average, preliminary Reuters data showed.
Last week, the Fed decided to trim its bond purchases by another $10 billion as it stuck to a plan to wind down its extraordinary economic stimulus despite recent turmoil in emerging markets.
VTB Capital analyst Andrey Kryuchenkov said the Fed is not going to change its forward guidance due to a lack of inflation pressures.
"However, from an investor point of view, this still suggests a strong dollar going forward," he said.
The dollar index fell 0.3 per cent, underpinning gold's gains.
Gold prices have risen around 5 per cent since the beginning of the year, though investors continue to regard recent mixed US economic data and emerging-market turmoil as insufficient to derail the global recovery.
Silver, tracking gold, was up nearly 5 per cent this week - its biggest weekly gain since mid-August. It was last up 0.5 per cent on the day at $20 an ounce.
Platinum group metals also posted small gains for the week on supply worries due to a possible strike in South Africa. However, latest news about government-brokered talks between mine union AMCU and the world's three biggest platinum producers to end a two-week wage strike limited further gains.
Platinum was trading up 0.5 per cent at $1,378.50 an ounce, while palladium rose 0.1 per cent to $708.42 an ounce.
Copyright @ Thomson Reuters 2014
