Gold Rises After Lower than Expected Jobs Report

Gold futures headed for the biggest gain in two weeks after U.S. employers added fewer jobs than forecast last month, reviving demand for a haven.

Payrolls climbed by 214,000, the Labor Department said today. That compares with an estimate for 235,000, the median forecast in a Bloomberg survey. After the report, the dollar fell as much as 0.3 percent against a basket of 10 currencies, erasing earlier gains.

The weaker-than-expected job gains boosted speculation that the Federal Reserve may hold interest rates lower for longer amid sluggish global growth. Gold earlier fell to the lowest since 2010 as expectations for improvements in the labor market pushed the dollar to a five-year high.

“People expected a higher number, and we saw a knee-jerk reaction in the market with the dollar tumbling down and gold getting a bid,” Michael Gayed, the chief investment strategist who helps manage $220 million at Pension Partners LLC in New York, said in a telephone interview. “The gold market is tracking the dollar and the Treasury market.”

Gold futures for December delivery rose 0.5 percent to $1,148.10 an ounce at 8:50 a.m. on the Comex in New York, heading for the biggest gain since Oct. 21. The metal fell in the previous seven sessions.

Prices are still heading for a third straight weekly loss. Holdings in global exchange-traded products backed by bullion are at the lowest in five years, and traders surveyed by Bloomberg News have the most bearish outlook since March.

Thirteen out of 23 market participants surveyed by Bloomberg expected lower gold prices next week. Goldman Sachs Group Inc. has forecast a drop to $1,050 by the end of the year.

The Bloomberg Dollar Spot Index climbed for four straight months as a diverging global growth outlook is increasing demand for the U.S. currency. A stronger dollar cuts demand for gold as a store of value.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza