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Gold up sharply on poor U.S. data

Xinhua, June 4, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose sharply on Friday as poor U.S. jobs data caused a spike in the price of the precious metal.

The most active gold contract for August delivery rose 30.3 U.S. dollars, or 2.50 percent, to settle at 1,242.90 dollars per ounce.

Gold was given extensive support as the U.S. Department of Labor released its big jobs report on Friday showing nonfarm payrolls increasing by a much-worse-than-expected 38,000 and the two previous months were revised lower by 59,000, which was also much-worse-than-expected.

Analysts believed this worse-than-expected report likely had an impact on investor expectations for the U.S. Federal Reserve' s Federal Open Market Committee meeting scheduled for later this month. Ever since the release of the April Federal Open Market Committee (FOMC) meeting minutes, traders believe that the Fed will keep a June interest rate increase on the table but with the release of this poor jobs data, investors believe the Fed may raise rates from 0.50 to 0.75 during the July FOMC meeting. According to the CMEGroup's Fedwatch tool, the current implied probability of a hike from 0.50 to 0.75 is at 4 percent for the June meeting, 34 percent at the July 2016 meeting, and 46 percent at the September 2016 meeting.

The precious metal was given further support as the U.S. Dollar Index fell by 1.64 percent to 93.98 as of 19:00 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

Silver for July delivery added 34 cents, or 2.12 percent, to close at 16.365 dollars per ounce. Platinum for July delivery rose 21.80 dollars, or 2.27 percent, to close at 981.90 dollars per ounce. Endit