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Gold Higher as U.S. Job Growth Slows

Release Date: 
Friday, May 4, 2012

The price of gold rose as job growth slowed in the U.S., raising expectations for further stimulus from the Federal Reserve. Gold traded at $1,643.90 per ounce at 7:10 a.m. Pacific Time on the New York Spot market with silver at $30.47 per ounce. (Click here for the most current spot prices.)

U.S. non-farm payrolls increased by 115,000, the Labor Department said, falling short of expectations and representing the smallest gain in six months. The unemployment rate, obtained by a separate survey of U.S. households, was down to 8.1 percent. A broader measure of unemployment, which includes job seekers as well as those underemployed in part-time jobs, was unchanged at 14.5 percent. These figures do not capture discouraged workers who have stopped looking for work or who have left the work force.

"Some people will be looking at gold as a flight-to-quality as the job numbers are lighter than expected," said Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago. "People are tilting towards the camp that expects some kind of easing."

"The $64 million question is what it means for quantitative easing, which of course is key for the gold market," said Societe Generale analyst Robin Bhar.

"People are investing in gold for two reasons: One, because they are worried about the economy so this is a safe bet, and also should any kind of monetary of fiscal stimulus be announced, gold will be a good hedge," said Pratik Sharma, a fund manager Atyant Capital Management Ltd.

(Source: "PRECIOUS-Gold edges into positive territory after U.S. data," Reuters, May 3, 2012; "Gold Gains for First Time This Week in N.Y. on U.S. Payroll Data," Bloomberg, May 3, 2012; "Gold advances after four-day losing streak," MarketWatch, May 3, 2012 "Jobs Data Point to Sluggishness, " Wall Street Journal, May 3, 2012)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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