Gold prices were popping Friday after an unexpected and disappointing June jobs report in the U.S. triggered a flight to safety.
Gold for August delivery was adding $11.50 to $1,542.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,546 and as low as $1,525 while the spot gold price was jumping $9.40, according to Kitco's gold index.
Silver prices were down 3 cents to $36.50 an ounce trading more as an industrial metal, where slowing growth and demand are issues, rather than as a safe haven investment. TheU.S. dollar index was adding 0.31% at $75.14 and the euro was down 0.76% vs. the dollar.
A severely disappointing jobs number in the U.S. triggered a flight to safety into gold as investors dumped stocks headed into the weekend. In June the U.S. added only 18,000 jobs and only 54,000 private sector jobs while the unemployment rate rose to 9.2%. The employment rate can rise because more people enter the work force but in June it rose because there were just more people unemployed. Currently there are 7.5 million people collecting unemployment benefits.
The shock of the number was so severe because many analysts upgraded their job outlook based on Thursday's ADP employment report, which said the private sector added 157,000 jobs in June. Deutsche Bank had predicted that the unemployment rate would fall to 9% and raised private job expectations by 60% to 200,000 from 125,000. These kind of high expectations were slaughtered after the reading which was helping gold prices.
"Today's game changing figures ... [makes] gold increasingly attractive," says George Gero, senior vice president at RBC Capital Markets. "Technically gold is now looking like $1,575 resistance, $1,525 support, with $1,555 closing price a possible technical buy-point." Gold's record close was achieved May 2nd at $1,557.10 an ounce. Gero does point out that the one thing gold is lacking is higher open interest, otherwise known as long positions.
Before the jobs number, the metals had been in wait and see mode. After a powerful three day rally, gold and silver prices were up 3.2% and 8%, respectively, and some investors were taking profits. For some analysts, prices still have a lot more to prove.(The Street)
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