July 10 (Bloomberg) -- Gold futures jumped to a one-week high as minutes from the Federal Reserve’s last meeting showed many officials want to see more signs of employment picking up before they begin slowing the pace of bond purchases.
“Many members indicated that further improvement in the outlook for the labor market” is needed before tapering the rate of asset buying, according to the record of the Federal Open Market Committee’s June gathering released today. The jobless rate held at 7.6 percent in June. Bullion doubled from the end of 2008 to a record $1,923.70 in September 2011 as record global stimulus boosted the appeal of inflation hedges.
“The gold market is pleasantly surprised, and is rallying on the minutes,” Tom Power, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “The unemployment number is the key number that the Fed is watching, and with that still above 7.5 percent, investors think that easing is here to stay for some time.”
Gold futures for August delivery climbed 0.3 percent to $1,249.10 in electronic trading at 3:08 p.m. on the Comex in New York. Earlier, the price touched $1,264.50, the highest for a most-active contract since July 2. The metal settled up 0.1 percent at $1,247.40 at the close of regular trading.
Through yesterday, gold dropped 26 percent this year, erasing $62 billion from the value of exchange-traded products backed by the metal, as some investors lost faith in bullion as a store of value.
Fed officials met before the Labor Department’s jobs report for the month of June exceeded expectations, with the economy adding 195,000 jobs.
The central bank began purchasing $40 billion a month of mortgage backed securities in September and announced $45 billion a month of Treasury purchases in December. The program, known as QE3 for the Fed’s third round of quantitative easing, has expanded the central bank’s balance sheet to a record $3.49 trillion.
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