Gold at session highs on weak U.S. jobless data

Gold erased earlier losses on the day and hit session highs following unexpectedly downbeat U.S. unemployment data, which backed some of the policy makers opinions revealed in the FOMC July meeting protocols that the U.S. economy needs to be additionally monitored before tapering the $85 billion bond purchasing program. Silver, platinum and palladium also surged.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1 378.70 per troy ounce at 14:13 GMT, marking a 0.63% daily advance. Prices ranged between days high of $1 381.10, near Mondays two-month high, and low of $1 354.80 an ounce. The precious metal slipped 0.72% on Wednesday but erased its weekly decline following Thursdays rebound and rose by 0.2%.

Gold rebounded on Thursday as it drew support by an unexpectedly weak U.S. jobless data. The U.S. Department of Labor reported that the number of people who filed for initial unemployment benefits in the week ended August 17 surged by 13 000 to a seasonally adjusted 336 000, surpassing expectations for a rise to 330 000. This supported some of the FOMC policy makerss stance that the U.S. economy requires further monitoring before Quantitative Easing is decelerated. Last weeks reading received an upward revision to 323 000 from the previous reading of 320 000.

Gains however remained capped as the monetary easing program is nevertheless expected to be pared within the end of the year. Yesterdays released minutes from the Federal Open Market Committee’s July meeting showed that most of the policy makers supported Fed Chairman Ben Bernanke’s timeline to taper the $85 billion bond purchasing program by the end of the year.

“Almost all participants confirmed that they were broadly comfortable with the committee reducing the pace of its securities purchases later this year,” the minutes revealed. Only some of the members stated that it is important to remain patient and evaluate additional information on the economy before making a decision regarding trimming Quantitative Easing.

According to a Bloomberg survey of economists, 65% of the participants expected that the Federal Reserve will start trimming its $85 billion per month bond purchases after FOMC’s September meeting.

The precious metal was supported however by prospects for a strong physical demand in the top two consumers. According to World Gold Council data, global bar and coin sales rose by 78% to 507.6 tons in the second quarter compared to a year earlier as demand in India and China, the world’s top two consumers, more than doubled. Jewelry demand increased by 47% to 575.5 tons.

Sales of coins and bars will reach as much as 1 000 metric tons in the two countries by the end of the year as low prices and economic recovery spurred demand. China’s demand totaled 776.1 tons last year, while India consumed 864.2 tons, council data showed.

Market players will also be keeping a close eye on Fridays New Home Sales in the U.S. to further gauge the economy’s recovery pace. The indicator is expected to have declined to 0.490 million units sold in July, down from 0.497 million in the preceding month.

Elsewhere on the precious metals market, silver, platinum and palladium tracked golds upward momentum. Silver for September delivery traded at $23.273 per ounce at 14:12 GMT, up 1.36% on the day. Platinum October futures surged 0.70% to $1 529.70 per ounce, while palladium for delivery in September rose to $753.20 an ounce, marking a 0.84% daily advance.