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U.S. Unemployment Rate Falls

Release Date: 
Friday, October 5, 2012

The price of gold fell after the U.S. unemployment rate dropped to below 8 percent to 7.8 percent in September. Gold was $5.30 lower at 7:45 a.m. Pacific Time on the New York Spot Market, trading at $1,786.00 per ounce. Spot silver was $.13 lower, trading at $34.94 per ounce. (Click here for the most current spot prices.)

August and July payroll numbers were revised higher, possibly explaining the drop in the unemployment rate. August payrolls rose 142,000 compared with the 96,000 initially reported and July was up 181,000 versus a prior figure of 141,000.  A broader measure of unemployment was flat at 14.7%.

“I think generally the data was quite positive for risk appetite so we may have seen some safe haven buying coming out of gold," said Standard Chartered analyst Daniel Smith. Gold traders were the most bullish in three weeks as gold holdings expanded to a record after central banks statements pledging to support growth. Twenty of 32 analysts surveyed by Bloomberg expect prices to rise next week, nine were bearish and three were neutral.

“More and more people are going to anticipate inflation in the future because of quantitative easing and the amount of debt we’ve got in the system,” said Frederique Dubrion, the Geneva- based president and chief investment officer of Blue Star Advisors SA, which manages metals and energy assets. “We can print whatever amount of money we need, but you can’t print gold. It’s nobody’s liability, it’s a hard currency.”

“There doesn't seem to be anything else they can do besides pumping more money into the economy," said Ronald Leung, a dealer at Lee Cheong Gold Dealers in Hong Kong. "Dollar weakness, more easing, as well as the tension in the Middle East, will all benefit gold."

Christen Tuxen at Danske Bank, said, "I think there are some good perspectives for gold going forward given that we've had promises from major central banks to keep interest rates low for a very long time.”

(Sources: “Unemployment Rate Falls to 7.8%,” Wall Street Journal, October 5, 2012; “Why Did the Unemployment Rate Drop?Wall Street Journal, October 5, 2012; “PRECIOUS-Gold hits 11-month high, extends gains to fifth day,” Reuters, October 5, 2012; “PRECIOUS-Gold backs off 11-month high after strong jobs data,”Reuters, October 5, 2012; “Gold Traders More Bullish as Holdings Reach Record: Commodities,” Bloomberg, October 4, 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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