Gold Rises From 2-Week Low as Weak Job Gains Spur Stimulus Bets

SAN FRANCISCO (Sept 6)   Gold rebounded from a two-week low as weaker-than-forecast gains in U.S. payrolls revived prospects for an extension of economic stimulus by the Federal Reserve, stoking demand for the metal as a store of value.

Employers added 169,000 workers after a revised increase in July of 104,000 that was smaller than initially estimated, Labor Department figures showed today. The median forecast of 96 economists surveyed by Bloomberg called for an August gain of 180,000. Gold fell 18 percent this year through yesterday, partly on concern that signs of accelerating growth would prompt the Fed to curb bond purchases as soon as this month.

“Today’s data makes it clear that the economy is still weak and needs economic support,” Carlos Perez-Santalla, a New York-based broker at Marex North America LLC, said in a telephone interview. “People now think that the Fed may have to delay the tapering.”

Gold futures for December delivery gained 0.8 percent to $1,383.40 an ounce at 9:37 a.m. on the Comex in New York. Earlier, prices dropped to $1,358.80, the lowest since Aug. 22. The metal is down 28 percent from an all-time high of $1,923.70, reached two years ago.

Fed officials, who are debating whether the U.S. economy is improving enough to warrant curbing $85 billion of monthly bond purchases, are scheduled to meet for two days through Sept. 18. Gold rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system by purchasing debt.

Bullion has rallied 17 percent from a 34-month low in June as demand for jewelry, bars and coins surged in Asia and amid concern the U.S. will attack Syria for its alleged use of chemical weapons against civilians.

Silver futures for December delivery gained 2.5 percent to $23.835 an ounce in New York.