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U.S. Unemployment Rate Ticks Higher

Release Date: 
Friday, August 3, 2012

Gold prices moved higher after U.S. Labor Department data showed higher than expected job growth in July, although the unemployment rate rose, tempering market sentiment.  Gold was $11.50 higher at 7:01 a.m. Pacific Time on the New York Spot Market, trading at $1600.80 per ounce.  Spot silver was $.51 higher, trading at $27.74 per ounce.  (Click here for the most current spot prices.)

U.S. employers hired 163,000 workers in July, the most in five months, versus economist expectations of 95,000.  The unemployment rate ticked up from 8.2 percent to 8.3 percent. 

Several analysts discussed the effect of this data on the Federal Reserve’s decision whether to implement new monetary stimulus measures in the U.S. “Traders think that the Fed is watching the unemployment rate very closely, and that will determine the timing of the stimulus,” said Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago. “Some people may move to gold before the Fed makes an announcement.” 

Stephen Stanley, chief economist at Pierpoint Securities, said "even with the better-than-expected payroll number, it's not sufficiently big enough to change the big-picture view.”

A research note from Commerzbank stated the bank expects “a significant increase” in the price of gold during the second half of the year.  The note also discussed gold’s current resilience after the European Central Bank (ECB) and the Fed held off announcing new stimulus measures this week. 

“Given the disappointment at the ECB’s failure to act and the sharp fall in prices of other commodities, yesterday’s drop in the gold price was actually fairly moderate,” Commerzbank analysts said.  “We see this as a sign of relative strength, and are still confident that the fears about the financial system, the geopolitical risks, the low and in some cases negative real interest rates, coupled with a ‘currency war’ and continued interest on the part of investors and central banks, create a positive environment for gold’s traditional role as capital protection.”

(Sources:  “Economy Adds 163,000 Jobs,” Wall Street Journal, August 3, 2012;

PRECIOUS-Gold prices retreat as U.S. jobs data beats forecasts,” Reuters, August 3, 2012; “Gold Seen Cutting Weekly Drop As Slump Prompts Purchases,” Bloomberg, August 3, 2012; “Gold advances on payrolls data, lower dollar,” MarketWatch, August 3, 2012)

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