Gold rallies for the day, drops 1.2% on week
Employment numbers pressure the dollar, U.S. equities
An earlier version of this story incorrectly reported the number of months since job growth was lower than in March.
SAN FRANCISCO (MarketWatch) — Gold futures closed more than $20 an ounce higher on Friday, paring their loss for the week, as a disappointing U.S. jobs report pressured the dollar and contributed to a slide in the stock market.
Gold for June delivery +1.89% rose $23.50, or 1.5%, to settle at $1,575.90 an ounce on the Comex division of the New York Mercantile Exchange.
Tracking the most-active contracts, prices were still down 1.2% from the final trading day of last week. They settled with a loss of $1.10 on Thursday, which marked their third straight decline. Read about why gold fell and what to do next.
The jobs data will “likely silence those calling for a phased withdrawal” of quantitative easing by the Federal Reserve — at least for awhile, said Peter Grant, chief market analyst at USAGold.
U.S. jobs gains for March came in at the lowest level in 9 months — a gain of 88,000 new jobs versus expectations for a rise of 190,000. That forecast had already been cut down from an earlier target of 195,000 new jobs after a batch of downbeat data this week.
“Another second-quarter downturn in the U.S. economy is actually positive for those who want the Fed’s QE3 program to continue,” said Craig Erlam, market analyst with Alpari U.K., in a note. “Gold, as an inflation hedge, tends to be one of the biggest beneficiaries of more QE, so this reaction clearly suggests that traders believe QE3 is here to stay.”
Investors look to nonfarm payrolls for any hints about when the Federal Reserve will taper down its asset purchases. Gold prices tend to benefit in periods of accommodative policy, though that hasn’t worked as an exact science.