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Payroll News Pushes Gold Up

Written By Brian Hicks

Posted August 6, 2012

U.S. hiring showed an unexpected rise in July, but the unemployment rate also ticked up from 8.2 to 8.3 percent. The two things together renewed investor speculation about another round of Federal quantitative easing.

In the markets, gold rose by around 1 percent, the dollar dropped slightly, and equities delivered a robust showing.

However, despite gold’s gain, it still had its lowest weekly performance in six weeks. The Fed last week had a major policy meeting wherein no new QE news emerged—something that caused investors to go on a gold selling spree.

Upon news that hiring was at a five-month high, Wall St. rallied 2 percent and commodities rose in general, with crude oil leading the way.

Reuters reports:

“Even though the nonfarm payrolls beat the estimates, the unemployment rate also rose, so the odds for a QE are all the same,” said Nicolas Berge, a hedge fund trader at Geneva-based Absolute Capital Group which invests in precious metals, commodities futures and currencies.

Spot gold rose to $1,603.30 while US gold futures for December ended at $1,609.30 on Friday.

That marked a drop of 1.2 percent for the week, which more or less nullified any gains made after the European Central Bank, like the Fed, did not unveil any news of further quantitative easing, leaving sentiment over the Euro shaky.

Despite much talk from the Fed and the ECB about commitment to stable markets, gold has swung between $1,675 and $1,525 per ounce over the past three months.

The news about payroll growth is likely to delay any new quantitative easing. But Europe’s continuing economic pains and a looming U.S. economic tightening next year could offset that.