Gold Jumped $25 on Weak Job Data
Why Gold Bounced Back after 5 Days of Losses
Gold jumped $25
Gold futures on COMEX, a commodity division of the New York Merchantile Exchange, for October delivery climbed close to $25 on Friday, October 2. After losing for five straight days, gold futures gained 2.06% to settle at $1136.6 per ounce, the biggest gain that gold has seen since August 20. The outlook for tighter monetary policy prompted investors to favor yield-bearing assets.
US payrolls backed the gain in gold, as payrolls rose less than expected in September. Gold futures jumped almost $25 in 15 minutes on Friday after new US jobs data said that September non-farm payrolls grew much slower in September compared analysts’ median forecast. US non-farm employment data measures the change in the number of employed people during the previous month. The 142,000 added jobs in the last month missed consensus predictions of 201,000. However, the unemployment rate forecast held constant at the forecasted 5.1%.
FOMC could delay liftoff even further
The figures from October 1 further weaken the case for the Federal Reserve to raise the US interest rates in the current year. The unfavorable data will likely push back the interest rates even more. The FOMC (Federal Open Market Committee) had said that international risks could further dampen the inflation figures, thus delaying the liftoff. A further delay may once again buoy the precious metals as non-interest bearing gold can compete with close-to-zero interest rates.
A rise in gold prices proved beneficial for gold-backed ETFs as well. The SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU) rose 2.12% and 2.23%, respectively, on Friday. With the rise in precious metals prices, most mining companies that are a part of the Market Vectors Gold Miners ETF (GDX) saw gains on the day. Stocks like Agnico-Eagle Mines (AEM), Eldorado Gold (EGO), and Coeur Mining (CDE) were among the top gainers in GDX. These three stocks together make up ~9.5% of GDX. The ETF saw a rise of 8.05% on Friday, October 2.
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