Poor jobs report juices Gold

Here are the world’s top stories on the outlook for Gold and Silver prices and related economic indicators for this week.



Friendly Number for Gold in Jobs Report

Gold prices closed over $1300 for the week, with gold for June COMEX prices jumping 1.5% for the day to settle at $1303.50. This is the highest close since March 25, and the largest one-day gain since March 12. May silver also saw a modest gain of 0.7% for the week, but dropped below an earlier high of $20.23 to close at $19.95.

Prices had slipped during the week, as edgy investors waited for the non-farm payroll figures to be published on Friday. Prior to the release of these figures, gold appeared to be headed for the longest weekly losing streak in six months. Median forecasts predicted job growth to be at 200,000, and when the figures released at 12:30 GMT Friday came in at just 192,000 jobs, gold prices rebounded.

Jim Wyckoff, senior analyst at Kitco.com, noted in Marketwatch  that the slightly lower-than-expected job growth in March creates “ a bullish underlying factor for the precious metals.”  George Gero, a financial advisor at RBC Wealth Management, commented in an ABC News report:  “We had a friendly number for gold in the jobs figure today.”

QE (Quantitative Easing)

According to Reuters,  “Analysts said the jobs figures eased fears of an early interest rate increase by the Federal Reserve.” Jeffrey Wright, Managing Director at H.C. Wainwright, notes that gold traders believe the weaker-than-expected job numbers will force the Federal Open Market Committee to curtail tapering of quantitative easing and “extend the process before actually raising rates.”

Stock Market

A stock market slump at the end of the week also helped boost gold prices, according to ABC News. The Nasdaq Composite fell 110.01 points, or 2.6%, while the S & P 500 dropped 1.3%. The losses were sharpest in the tech sector. “We are seeing a key reversal, significant retrenchment in risk in equity markets. For days we saw equities going higher while gold and oil drifted lower and now this trend has reversed,” comments Colin Cieszynski, senior market analyst at CMC markets.

Global factors

The European Central Bank made a decision on Thursday April 4th to leave interest rates unchanged, and this spurred a drop in gold prices on Thursday, as MarketWatch points out. Worldwide interest in gold is still strong, however, as Iraq’s Central Bank bought about $1.5 billion worth of gold, its first major bullion buy since August 2012. Countries around the world have become net buyers of gold bullion, as world gold production continues to decline, according to Michael Lombardi of Profit Confidential.

Summary Opinion & Commentary

USAGold comments that “the jobs report contained a little something for everyone,” and the Wall Street Journal suggests that the figures most likely won’t divert the Federal Reserve from its present strategy of winding down bond buying.