Gold climbs 2-1/2-month peak as jejune US job growth clouds Fed taper timeline

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Gold climbs 2-1/2-month peak as jejune US job growth clouds Fed taper timeline
Gold climbs 2-1/2-month peak as jejune US job growth clouds Fed taper timeline (Provided by Financial World)

On Friday, both spot gold and US gold futures’ prices soared more than 1 per cent, sky-rocketing to their highest levels in more than two and a half months, as a sluggish US job growth in August had clouded the prospects of a tapering of fiscal support in a near term and proffered a curb in the applecart for the US Dollar, eventually restoring the precious yellow-metal’s safe-haven bid.

In point of fact, US Labour Department’s much-awaited non-farm payrolls report for August had revealed earlier in the day that the US economy had created just 235,000 jobs in August, the smallest job gain since January this year, as a recent rise in delta cases had added to hindrances in new hiring in leisure and entertainment sector with small businesses likes of restaurants bearing the heaviest brunt.

Nonetheless, overall trends in US labour market remained upbeat with unemployment rate falling to a 17-month low of 5.2 per cent, adding a cushion to the greenback while paring some of the safe-haven yellow metal’s gains.

In tandem, US Federal Reserve’s expected timeline to taper its $120 billion monthly bond repurchase program had been a key catalyst in the day, as a big miss in job headline numbers had clouded the likelihoods of a taper-talk while tumbling the US Dollar for a fourth straight session in a row, which in effect had made gold futures’ prices cheaper for the traders who were holding the bullion in other currencies.

Gold gains over 1 per cent as US job growth falls well short of expectation

Citing statistics, in the day’s commodity market wind-down, spot gold prices ended 1.0 per cent higher to $1,827.47 per ounce after hitting an intra-day peak of $1,833.80 earlier in the session, the highest level since mid-June, while US gold futures’ prices gained 1.2 per cent to settle down at $1,833.70 an ounce with both benchmarks reporting fourth straight weekly gains.

On the week, spot gold gained 0.53 per cent. Meanwhile, referring to a much softer-than-anticipated US job growth in August, a Saxo Bank analyst Ole Hansen said, “Gold received a welcome boost from a much weaker (jobs) report.

But the fact that gold has failed to break above resistance at $1,835 could indicate some scepticism about whether this means peak growth and delayed taper”.