Labor Department Report and New Ukraine Tensions Cause Friday Gold Price Rally


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



Labor Department Report and New Ukraine Tensions Cause Friday Gold Price Rally

May 2 closing price for June gold on Comex: $1,302.90, and for July silver: $19.55. Spot prices at close on Friday were $1298.00 and $19.45.

Ending a week in which gold hovered in a “holding pattern,” April’s better-than-expected non-farm payroll numbers sent prices lower in early trading on May 2. The precious metal rallied later in the day to rise more than 1% as traders responded to escalating violence in Ukraine as well as to the news that the positive unemployment figures are due partly to the number of people who have stopped looking for work.

QE (Quantitative Easing)

On Sunday May 4, a top Fed official Error! Hyperlink reference not valid. in an interview on Fox News that  he personally expects the massive bond-buying program to end in October.

Federal Reserve

In the Sunday Fox News interview,  Dallas Federal Reserve Bank President Richard Fisher said that the Federal Reserve will not consider when to raise U.S. interest rates until after October. “Then we have to see how the economy is doing, including these broader measures of unemployment and where we stand before we can talk about how we might move the short-term rate.”

Stock & Bond Market

After rising in the immediate aftermath of Friday’s jobs report, stocks sagged later to close slightly down for the day: The Dow fell about 0.3% on Friday, and the Nasdaq Composite and S & P 500 both saw a drop for the day of 0.1%. Friday’s closing figures were somewhat anticlimactic at the end of a week which briefly saw both the Dow and the Nasdaq climb into record-setting territory — but Friday’s drop is small and the equity markets continue to be strong overall

Gold & Silver Market

Friday’s gold rally picked up some last-minute speed as gold traders made purchases to offset the short positions they had just recently sold.

Bloomberg expressed optimism that Gold prices in India would rise sharply this week as 900 million Hindus celebrated the holiday of Akshaya Tritiya, on which it is considered auspicious to buy precious metals. However, on Friday the Odisha Sun-Times reported that buying was off 20% when compared to last year. Silver prices are  “lackluster at best,”  according to Kitco commentator Gary Wagner. He points out that imports of silver to India are down 42% and that the critical support price for silver is $19.00.

Global Politics

Friday saw increased pressures in Ukraine, as the U.N. Security Council convened an emergency meeting to discuss what Russia termed a “serious escalation of violence.” Threatening to cut natural gas supplies to Ukraine, Russia drove its already stressed relationship with the west into record low territory, according to Reuters.

Summary Opinion & Commentary

Kitco News projects that traders will continue to watch two fronts in the coming week: the U.S. economy and events in Ukraine. If geopolitical conflicts continue to heat up, it will lead to increased safe-haven demand.

Gary Wagner discusses the question of whether a gold rally can be sustained in his May 2 video on Kitco. In his comments, Wagner acknowledges being disappointed by the past week, but states that he still believes in a sustained rally but is changing its timing. He is waiting to see whether the correction is over yet, and whether the low of $1268. can hold.

Kitco’s weekly survey had 19 respondents, and 11 of the 19 forecast gold prices to slip during the coming week. Only four participants in the survey expected gold prices to rise this week. Sean Lusk, director of commercial hedging with Walsh Trading, represents the majority opinion as he says that Friday’s payroll figures and the robust equity markets will “put some downward pressure on the metals.” He points out that the only factor supporting gold prices at the moment is the ongoing conflict in Ukraine.

On the other hand, Peter Schiff offers a new video in which he points out indicators that the U.S. economy is actually not nearly as strong as most analysts commonly assume, and he states categorically that “Gold is going to take off, it’s going to explode.”