Gold closes higher on the Comex

Gold prices have risen as a mixed US employment report forced investors to recalibrate their assumptions about the Federal Reserve’s future monetary policy.


Gold for April delivery, the most active contract, on Friday gained $US5.70, or 0.5 per cent, to settle at $US1,262.90 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the highest settlement price since January 27, when futures closed at $US1,263.40 an ounce.

The Labor Department on Friday reported that the US economy added 113,000 new jobs in January, well below forecasts of a 189,000 increase. The disappointing data fanned hopes that the Federal Reserve would keep its stimulus program in place for longer than previously thought, sending gold to the day’s high of $US1,272 an ounce.

However, gold futures were unable to hold those intraday highs. Some market participants pointed to bright spots in the jobs report such as the upward revisions to November’s employment data as well as a month-on-month improvement from December.

“It’s a bad report, but I think you’ll need to get another one or two pretty bad ones before the Fed makes a move,” said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.

The Fed voted last month to reduce its monthly bond purchases by $US10 billion to $US65 billion, continuing the tapering process it started in December. Gold had benefited in recent years from the Fed’s efforts to spark the US economy to life, as successive rounds of bond buying fanned investor fears of high inflation or a weaker US dollar and many purchased the precious metal as a hedge. However, gold fell 28 per cent in 2013 on expectations the Fed will start reducing its bond-buying program.

Bill Baruch, a senior market strategist with futures brokerage iiTrader, said that gold’s lacklustre performance is in part because recent labour-market weakness could be explained by poor weather. Much of the US has been blanketed in snow during parts of December and January, disrupting people’s ability to find jobs in key industries like construction.

“These bad reports can be blamed on the weather, so that’s keeping the market in check,” said Bill Baruch, a senior market strategist with futures brokerage iiTrader in Chicago.

In the equity market, US stock futures initially fell following the jobs report only to rebound shortly thereafter. The S&P 500 was up 1.1 per cent in recent trade. Gold is considered less risky than stocks and tends to lose favour with investors when equities are doing well.

Settlements (ranges include open-outcry and electronic trading):

London PM Gold Fix: $1,259.25; previous PM $1,256.50

Apr gold $1,262.90, up $5.70; Range $1,255.50-$1,272.00

Mar silver $19.936, up 0.8 cent; Range $19.755-$20.090

Apr platinum $1,379.20, up $4.30; Range $1,374.40-$1,392.30

Mar palladium $708.80, down $1.55; Range $708.00-$715.00

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