Gold Ends Sharply Higher On Jobs Data

Gold futures surged to end at a more than one month high Tuesday, as the dollar trended lower against some major currencies after some soft jobs data out of the U.S. strengthened investor expectations the Federal Reserve would likely continue to maintain its $85 billion monthly quantitative easing program, with no cuts in the near future.  Gold thrives on any talk of monetary easing or stimulus plans such as the Federal Reserve’s $85 billion monthly bond-buying program, which also weaken the dollar to spur recovery.
Meanwhile, employment in the U.S. increased much less than expected in September, according to a Labor Department report Tuesday. Despite the weaker than expected job growth, unemployment rate in September dropped to 7.2 percent. Gold for December delivery, the most actively traded contract, jumped $26.80 or 2.0 percent to close at $1,342.60 an ounce Tuesday on the Comex division of the New York Mercantile Exchange.
Gold for December delivery scaled an intraday high of $1,344.70 and a low of $1,309.50 an ounce.  Yesterday, gold settled marginally higher as investors awaited a slew of upcoming earnings and macroeconomic reports after the sixteen-day U.S. government shutdown which ended last week.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, moved down to 871.72 tons from 882.23 tons. The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.20 on Tuesday, down from 79.69 late Tuesday in North American trade. The dollar scaled a high of 79.79 intraday and a low of 79.20.
The euro traded higher against the dollar at $1.3789 on Tuesday, as compared to its previous close of $1.3681 late Monday in North America. The euro scaled a high of $1.3789 intraday and a low of $1.3664. In economic news from the U.S., the Labor Department said said non-farm payroll employment increased by 148,000 jobs in September compared to economist estimates for an increase of about 180,000 jobs. Despite the weaker than expected job growth in September, unemployment rate in the country dipped to 7.2 percent from 7.3 percent in August.
Construction spending in the U.S. rose more than expected in August, a Commerce Department report showed Tuesday. Construction spending rose 0.6 percent to a seasonally adjusted annual rate of $915.1 billion in August from the revised July estimate of $909.4 billion. Economists expected spending to increase by about 0.4 percent.
Elsewhere, the U.K. budget deficit narrowed to GBP 11.1 billion in September from GBP 12.1 billion seen in the corresponding period last year. Public sector net borrowing excluding financial interventions was also below consensus of GBP 11.3 billion. The GBP 3.2 billion received in cash from the sale of Lloyds banking group shares in September did not reduce PSNB, the ONS said.
Switzerland’s trade surplus beat expectations in September, data from the Federal Customs Administrations showed. The trade surplus for September was CHF 2.5 billion compared with an expected CHF 2 billion surplus. In the July-September period, the trade surplus was CHF 6.9 billion.
Source: RTT Staff Writer
Source: Bullion Bulletin

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