Gold surges on disappointing U.S. payrolls

Gold surged in late European trading and erased earlier daily losses as the long awaited U.S. Non-Farm Payrolls disappointingly climbed less than expected. The precious metal rose back above the $1 300 mark to hit a new days high minutes after the U.S. Department of Labor released the data.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery marked traded at $1 313.05 at 13:00 GMT, up 0.14% on the day. Prices ranged between days high of $1 317.65, which was hit minutes after the release of the report, and low at $1 282.65 per ounce, a two-week low. The metal fell 1.44% on Thursday but trimmed its weekly decline to 1.5% following Fridays gain.

Gold surged over $30 within 20 minutes after the release of unexpectedly low payrolls data. The U.S. Department of Labor said the U.S. economy created a lot less jobs than projected. Non-Farm Payrolls climbed by 162 000, underperforming analysts expectations for 185 000. This was also below Junes reading of 188 000 jobs created, which was revised down by 7 000 from 195 000.

The negative data caused the U.S. dollar to plunge as speculation arose that Fed will probably defer Quantitative Easings tapering as its main requirement, a consistently improving and stable labor market, seems to remain elusive.

The dollar index, which measures the greenbacks performance against a basket of six major counterparts, traded mostly higher throughout the day but plunged to a days low of 81.98 minutes after the data was released. The September contract traded at 82.09 at 12:58 GMT, down 0.41% on the day. Days high stood at 82.57. The U.S. currency gauge rose 0.86% on Thursday but trimmed its weekly advance to 0.4% on Friday.

Adam Klopfenstein, a senior market strategist at Archer Financial Inc. in Chicago, said for Bloomberg: “The payrolls data leave much to be desired for the economy, and the Fed may not apply the brakes on stimulus just yet. Investors continue to be very cautious on mixed data signals.”

The negative payrolls reading offset other overall positive U.S. data that was released on Friday. The U.S. Department of Labor reported the Unemployment Rate fell to 7.4% from 7.6% in July, the lowest level since December 2008. Economists expected the indicator to drop by 0.1% to 7.5%.

Meanwhile, Americans June earnings also disappointed. Average Hourly Earnings fell by 0.1%, confounding analysts expectations to surge by 0.2%, which would have still been below Mays 0.4% jump. At the same time, Personal Income rose by 0.3%, mismatching forecasts for a 0.4% surge and Mays downward revised reading of 0.4%. On the other hand, Personal Spending exceeded the income increase of the average American and met expectations for a 0.5% surge, compared to Junes downward revised figure of 0.2%.

Core Personal Consumption Expenditures (Core PCE) rose by 0.2%, outperforming expectations and Mays 0.1% rise. Meanwhile the indicator jumped by 1.2% compared to the same month a year earlier, followed by an upward 0.1% revision of Mays reading to 1.2%.