Gold Jumps as U.S. Jobs Disappointment Dims Tightening Prospects

  • Payrolls climbed by 151,000, trailing 180,000 estimate
  • Investors had cut gold-backed fund holdings to lowest in month

Gold futures gained, reducing a weekly decline, after U.S. employment data missed estimates, boosting the metal’s appeal as a haven.

Payrolls climbed by 151,000 last month following a 275,000 gain in July, a Labor Department report showed Friday in Washington. The median forecast in a Bloomberg survey called for 180,000.

Gold is up 25 percent this year as uncertainty in U.S. growth pushed the Federal Reserve to consider holding off raising interest rates this year, and as the Brexit left traders considering an economic slowdown in Europe. Higher rates reduce the appeal of gold, which doesn’t pay interest or offer returns like assets such as bonds or equities.

“Traders are bidding up gold because they think the jobs number isn’t strong enough to justify two rate hikes this year,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said by telephone.

Gold futures for December delivery gained 0.7 percent to settle at $1,326.70 an ounce at 1:47 p.m. on the Comex in New York, erasing a weekly loss.

Before the release of the jobs report, the metal was little changed as it headed for a second straight weekly decline. On Thursday, it touched the lowest since June 24, the day prices surged on demand for a haven following the the U.K.’s vote to exit the European Union.

Investors have cut holdings in gold-backed funds to the lowest in a month after recent hawkish comments by Fed officials. Futures indicate a 60 percent chance of the central bank raising rates this year, up from 37 percent a month ago. Higher borrowing costs hurt the appeal of owning assets such as gold that don’t offer yields.

In other precious metals:

  • Silver for December delivery rose 2.2 percent to $19.366 an ounce on the Comex.
  • On the New York Mercantile Exchange, platinum and palladium also gained.
  • Holdings in bullion-backed exchange traded funds fell 4.7 metric tons to 2,016.6 tons on Thursday, the lowest in a month.
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