Gold prices slip as traders weigh jobs data
New York (Sept 4) Gold prices pulled lower on Friday after a mixed US employment report raised uncertainty over the likely path of US monetary policy.
The economy added 173,000 new jobs in August, the Labor Department reported on Friday. This fell short of the 220,000-job increase economists had predicted. However, job gains for July and June were revised higher, signaling that the labor market had strengthened more than previously thought in recent months.
Gold prices surged to $US1,133.10 an ounce in response to the headline number, but they pulled back as investors sifted through the data and considered its likely impact on the Federal Reserve's upcoming monetary-policy decision, said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.
"It adds confusion into the September Fed meeting," Mr. Haberkorn said, adding that this is the last major indicator of US labor-market health that Fed officials will see prior to their monetary policy-setting meeting on September 16-17. The officials must balance the demands of maximum employment and stable consumer prices in making their decisions.
"A disappointing headline number is supportive for gold, but the upside does appear limited because of the back-month revisions," Mr. Haberkorn said. He added that gold will trade in a tight range for the next two weeks as traders brace for the Fed decision.
The most actively traded gold futures contract, for December delivery, was recently trading down $US2.30, or 0.2 per cent, at $US1,122.20 a troy ounce on the Comex division of the New York Mercantile Exchange.
Any delay to tighter monetary policy benefits gold, which doesn't pay interest and has an easier time competing with yield-bearing assets like Treasury bonds while rates are pinned near zero. The precious metal has been fading in popularity in recent years, as stable consumer prices and a recovering US economy lured investors to economically sensitive assets such as stocks and bonds. Trader expectations for tighter monetary policies from the Fed had pushed gold prices to a five-year low in July.
Source: Business-Spectator
