NEW YORK/LONDON: Gold rose 1.5 per cent last week, cementing a third consecutive weekly gain, after disappointing US jobs data stirred speculation the Federal Reserve will take a gradual approach to tapering its bond-buying stimulus this year.
The dollar fell broadly and the S&P 500 equities index SPX was flat after a closely watched Labour Department report showed US employers in December hired the fewest number of workers in almost three years.
US nonfarm payrolls rose just 74,000 in December, the smallest increase since January 2011, while the unemployment rate fell 0.3 percentage point to 6.7 per cent as more people left the labor force.
Analysts said that falling US labour participation is likely to prompt the Fed to be cautious in trimming its stimulus after the central bank opted to cut its bond purchases for the first time in December.
In addition, gold could be further underpinned by falling equities prices following last year’s tumble in bullion prices and stock markets’ record run-up, analysts said.
“As the stock market declines, hedge funds and momentum traders are taking profits off their equities positions and rolling them into gold,” said Jeffrey Sica, chief investment officer at New Jersey-based Sica Wealth, which manages more than US$1 billion in client assets.
For the week, gold was up almost one per cent, extending its rise to a third consecutive week, its longest weekly winning streak since August.
US Comex gold futures for February delivery settled up US$17.50 at US$1,246.90 an ounce, with trading volume about 10 per cent below the 250-day average, preliminary Reuters data showed.
Other analysts, however, said the weaker-than-expected US jobs data would boost gold prices in the short term only, because an overall improvement in the US economic outlook and a rising interest-rate environment will weigh on the metal’s price.
“Gold has been on the firm side this year and this data helps support that but the effect is being moderated by the fact that the Fed has begun tapering… nobody is now thinking the US economy is near collapsing,” Macquarie analyst Matthew Turner said.
Silver, meanwhile, rose 2.9 per cent to US$20.11 an ounce. Platinum was up 1.1 per cent at US$1,428.10 an ounce, while palladium gained 0.8 per cent to US$739.10 an ounce. — Reuters