PRECIOUS-Gold rises as stimulus hopes alive after payrolls

Sat Aug 4, 2012 1:20am IST

* Gold up as dollar tumbles, equities gain after US payrolls
    * Hopes for more Fed action boost gold
    * CME cuts silver, platinum, palladium margins
    * Coming up: U.S. consumer credit Tuesday

 (New throughout, updates prices and market activity)
    By Frank Tang
    NEW YORK, Aug 3 (Reuters) - Gold rose around 1 percent on
Friday as the dollar slid and equities rallied on data showing
U.S. hiring picked up more than expected in July, even as a rise
in the unemployment rate fed investor hopes for monetary
stimulus from the Federal Reserve.
    Despite the daily gain, gold posted its biggest weekly drop
in six weeks. Investors sold gold this week when the Fed ended a
policy meeting without announcing stimulus, although it said
support could be on the way if the economy did not pick up.
    The U.S. Labor Department reported that employers hired the
most workers in five months, boosting investor sentiment. The
report sparked a 2 percent rally on Wall Street and commodities
gains across the board led by crude oil.   
 
    At the same time, the unemployment rate rose to 8.3 percent
from 8.2 percent in June, inspiring hopes that the Fed might
launch a third round of quantitative easing, or QE, purchasing
government bonds to keep interest rates low.
    "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.
    "The increasing expectation of central-bank actions is
likely to help gold break above its recent trading range," Berge
said.
    Spot gold was up 0.9 percent at $1,603.30 an ounce by
2:53 p.m. EDT (1853 GMT). 
    U.S. COMEX gold futures for December delivery settled
up $18.60 at $1,609.30. Trading volume was about 25 percent
below its 30-day norm, preliminary Reuters data showed. 
    Gold dropped 1.2 percent this week. It has erased most of
the gains it made after European Central Bank did not commit to
more stimulus following an earlier pledge by ECB President Mario
Draghi to do whatever necessary to support the single currency.
    
    FED'S NEXT MEETING
    Gold prices have been stuck in a $150 trading range between
$1,675 and $1,525 an ounce in the past three months, as a lack
of firm commitment by central banks to stimulate failed to
attract new buying.
    "Even with the better-than-expected payroll number, it's not
sufficiently big to change the big-picture view," Stephen
Stanley, chief economist at Pierpoint Securities, said.
    While the payrolls growth probably dampened the urgency for
the Fed to act at its next Sept. 12-13 meeting, further monetary
stimulus remains in the cards given the threat to the economy
from a potential tightening in U.S. fiscal policy next year and
nagging debt troubles in Europe.
    Among other precious metals, silver, platinum and palladium
all rose on gold's coattails and after CME Group cut their
margins after the close of business on Monday. 
    Silver gained 2.3 percent to $27.73 an ounce. CME has
cut its margins three times since February.
    Platinum was up 1.7 percent at $1,400.49 an ounce,
while palladium rose 2 percent to $576.25 an ounce.
    
 2:53 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1609.30  18.60   1.2  1588.50 1609.90  113,637
 US Silver SEP  27.801  0.806   3.0   26.990  27.895   34,642
 US Plat OCT   1414.40  26.60   1.9  1384.10 1423.90    7,529
 US Pall SEP    578.20  10.35   1.8   567.80  583.10    2,050
                                                               
 Gold          1603.30  13.56   0.9  1587.15 1606.41         
 Silver         27.730  0.630   2.3   27.070  27.900
 Platinum      1400.49  23.49   1.7  1385.00 1415.99
 Palladium      576.25  11.05   2.0   570.00  581.25
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        124,996   170,363   193,042     17.16   -1.10
 US Silver       40,880    51,168    57,575     26.94   -3.14
 US Platinum      7,794     9,493     8,971        23    0.00
 US Palladium     2,228     3,089     4,350                  
                                                               
 
 (Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy and David Gregorio)
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Short of Expectations

Short of Expectations

Apple revenue lags Street's view despite strong China growth  Full Article 

Mircosoft Results

Mircosoft Results

Microsoft revenue rises, profit falls as Nokia absorbed  Full Article 

Deal Talk

Deal Talk

Exclusive - Lupin, U.S. firms weigh bids for GSK's mature drugs: sources  Full Article 

Relief For Sahara

Relief For Sahara

Supreme Court could allow Sahara boss to conduct asset sale talks, company says.  Full Article 

Classifying Banks

Classifying Banks

RBI to start announcing too-big-to-fail banks in Aug 2015  Full Article 

Food Scandal

Food Scandal

Starbucks, Burger King dragged in as China food scandal spreads.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage