Gold jumped the most in almost four weeks after a report showed that U.S. employment unexpectedly stagnated in August, lifting demand for haven assets.
The unemployment rate remained at 9.1 percent and payrolls were unchanged, the weakest reading since September 2010, Labor Department data showed. Analysts expected a gain of 65,000. Gold has more than doubled since the end of 2008, touching a record $1,917.90 an ounce last month, as governments worldwide struggled with debt crises and as record-low U.S. borrowing costs boosted bullion’s appeal as an inflation hedge.
“Today is one of a series of data points that, when taken in aggregate, continue to show a weakening U.S. economy and a lack of confidence in our government’s ability to do something about it,” Steve Shafer, who helps manage $300 million as chief investment officer of Covenant Investors, said by telephone from Oklahoma City. “Combined with the problems out of Europe, there’s a depreciating confidence in fiat currencies. All of those funnel into a heightened demand for gold.”
Gold futures for December delivery gained $47.80, or 2.6 percent, to close at $1,876.90 at 2:31 p.m. on the Comex in New York, the biggest increase since Aug. 8.
The Federal Reserve has taken the unprecedented step of saying it will keep borrowing costs at almost zero percent at least through mid-2013 to support the economy. Switzerland unexpectedly cut interest rates yesterday. The Bank of England and the European Central Bank left rates unchanged today.
“We had an end to the last gold cycle by jacking up interest rates, and that’s clearly off the table for the next couple of years,” Rick de los Reyes, who manages $800 million at T. Rowe Price Group Inc.’s Global Metals and Mining Fund in Baltimore, said today in a telephone interview. “We are going to be in a negative real-interest-rate environment. The price can go significantly higher.”
Gold has jumped 32 percent this year, heading for an 11th straight annual gain. The MSCI World Index of equities has slid 8.4 percent in 2011, and Treasuries were up 5.4 percent as of yesterday, according to a Bank of America Merrill Lynch index.
“We’ve got a non-impressive jobs number, to say the least,” Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “You’re going to see the risk-off trade today. Investors are feeling shaky about going into equities. Gold and Treasuries are going to be beneficiaries.”
Silver futures for December delivery added $1.537, or 3.7 percent, to $43.069 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for October delivery climbed $31.90, or 1.7 percent, to $1,884.80 an ounce. Palladium futures for December delivery declined $7.20, or 0.9 percent, to $783.20 an ounce.