Gold Futures Up On Jobs Report, Rate Outlook

New York (Aug 2)  Gold prices rose the most in a week Friday after U.S. employers added fewer workers than forecast in July, increasing pressure on the Federal Reserve to maintain lower interest rates.

Payrolls climbed by 209,000 in July, Labor Department figures showed today. The median forecast in a Bloomberg survey of economists called for a 230,000 increase. The jobless rate climbed to 6.2% from 6.1% in June.

Fed policy makers this week said they will keep their benchmark rate low until wages accelerate and more workers find jobs. This year, gold has climbed 7.7%, partly on concern that the U.S. recovery would falter.

"Today's numbers show that the economic growth is not consistent with the market expectations," Edward Dempsey, the chief investment officer at Pension Partners LLC, said in a telephone interview from New York. "People think that this number is an indication that the rate hike will not happen soon."

Gold futures for December delivery rose 0.9% to settle at $1,294.80 an ounce at 1:43 p.m. ET on the Comex in New York, the biggest gain for a most-active contract since July 25. The price fell 3% in July as a U.S. equity rally to a record eroded demand for the metal as a haven.

The metal surged 70% from December 2008 to June 2011 as the Fed bought debt and held borrowing costs at an all-time low. Last year, gold tumbled 28%, the most in three decades, amid concern that the central bank would taper monetary stimulus.

Source: Investors Business Daily