Gold for August delivery GCQ2 +3.13% climbed $48.70, or 3.1%, to trade at $1,612.90 an ounce on the Comex division of the New York Mercantile Exchange. Prices had traded as low as $1,545.50 in the electronic trading session.
For the week, futures prices are nearly 3% higher, based on a closing basis for the most-active contract.
“Gold reacts beautifully, and with the best price action, on U.S. troubles, and this morning’s wonderfully wobbly jobs data did the trick,” said Richard Hastings, macro strategist at Global Hunter Securities.
“Not only would there be more speculation about [a third round of quantitative easing] … but all of the data speak to tax revenue dilemmas due to growth limitations, and this means the U.S. budget comes back into focus,” he said. “If this occurs, then gold could rally this summer. If neither occurs, then gold would remain under pressure due to the return of deflation.”
Silver futures followed gold higher, with July silver SIN2 +2.43% tacking on 65 cents, or 2.4%, to trade at $28.42 an ounce.
The U.S. added just 69,000 jobs in May, the smallest net increase in nonfarm payrolls in a year, the government reported. Economists surveyed by MarketWatch expected a 165,000 increase.
Growth figures in payrolls were also revised lower for April and March.
May’s unemployment rate, meanwhile, rose to 8.2% from 8.1%, mainly because more people entered the labor force. Read more on the jobs data.
Separately, the Institute for Supply Management reported Friday that conditions for the nation’s manufacturers slipped in May, with the ISM index falling to 53.5% from 54.8% in April. Read more on ISM.
And over in China, rival surveys of manufacturing activity for May pointed to deteriorating conditions. Read more on China manufacturing.
More QE?
“Two months of disappointing jobs numbers implies a trend,” said Brien Lundin, editor of Gold Newsletter. “Two months of numbers this horrendous screams that a significant downturn is underway, and puts the QE3 theme front and center.”
“The speculators are starting to salivate over the next round of quantitative easing that will be served up to the markets,” he said. “Gold has been the first to react to this prospect.”
The next speech by a Fed governor will likely feature “some massaging of the message to recognize the ongoing weakness in employment and open the door to another round of money creation,” said Lundin.
Investors would then “seize upon this confirmation to move en masse into the QE trade, sending gold higher and sparking a rebound in other commodities, as well as the U.S. equity market in general,” he said.
Gold futures ended down 0.1% in regular New York trading on Thursday and lost 6% during May. Read more on Thursday’s gold trading,
But the disappointing jobs data “could be the first sign of a shift in gold back to safe-haven territory,” said Austin Kiddle, a director at London-based bullion brokers Sharps Pixley. Read Commodities Corner on gold’s identity crisis.
In other metals trading Friday, the weak economic data pressured prices for copper, sending its July contract HGN2 -1.44% lower by 4 cents, or 1.2%, to $3.32 per pound. July platinum futures PLN2 +0.66% rose $15.30, or 1.1%, to $1,432.90 an ounce and September palladium stood at $609.60 an ounce, down $4.30, or 0.7%.
Myra P. Saefong and Sarah Turner, MarketWatch – June 1, 2012