Gold futures weekly recap, March 31 – April 4

Gold futures surged the most in more than three weeks on Friday, snapping two weeks of losses, after a government report showed US employers added less workers than expected, raising economic concerns and boosting demand for the metal as a store of value. Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, were reduced to the weakest level in a month on Friday.

On the Comex division of the New York Mercantile Exchange, gold futures for settlement in June rose 1.5% on Friday, the most since March 12, to settle the week at $1 303.70 an ounce. Prices shifted in a daily range between $1 307.00 an ounce and $1 284.50 an ounce. Gold rose 0.6 percent this week, snapping two straight 5-day periods of declines.

Bullion has lost 3.1% in March as the US economy expanded at a faster-than-expected pace and after Federal Reserve Chair Janet Yellen said the central bank’s bond-buying program may be brought to an end this fall, with borrowing costs starting to rise by mid-2015. The Federal Reserve trimmed its monthly bond-buying program by $10 billion at the last three meetings.

However, the precious metal has climbed 8.4 percent this year as demand for haven assets was boosted amid a rout in emerging markets and Russia’s annexation of Crimea, which left Russia and the West involved in their worst conflict since the end of the Cold War.

Fed stimulus outlook

Employers in all sectors of the US economy, excluding the farming industry, added 192 000 new jobs in March, after a revised 197 000 gain in the precious month that was higher than previously reported. The median experts’ forecast called for 200 000 new payrolls to be added last month. Jobs creation is considered of utmost importance for consumer spending, which accounts for almost 70% of the US economy.

In 2013, the US added 194 000 payrolls each month on average, while in 2012 the jobs created were 186 000.

The jobs data “is below market consensus, and that’s supporting gold,” Michael Gayed, the chief investment strategist who helps oversee $250 million at New York-based Pension Partners LLC, said in a Bloomberg telephone interview. “This is a very crucial number that the Fed looks at.”

Fed President for St. Louis James Bullard said on April 2 that if inflation slows further, decreasing the pace of Fed tapering cannot be ruled out, even though he didn’t expect that to happen.

Bullion drew support after Federal Reserve Chair Janet Yellen said on March 31 that the central bank needed to do more to fight against unemployment, because keeping interest rates near zero for more than five years and swelling its balance sheet with asset purchases seemed not to be enough. She also added that the US economy still needed monetary stimulus for “some time” and that most of the Fed officials shared the same opinion.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, were reduced to 809.18, the weakest level since March 7. Holdings in the fund are up approximately 1% this year after it lost 41% of its assets in 2013 that wiped almost $42 billion in value. A total of 553 tons has been withdrawn last year.