Gold price unmoved, jury still out on US economy

Otmane El Rhazi from The Bullion Desk.

Gold was fairly unchanged in Friday afternoon London trading after a lukewarm US jobs report failed to answer many of the questions surrounding the US economy.

The spot gold price of $1,185.00/1,185.80 per ounce was up $1.40 on the previous session’s close. It peaked at $1,193.80 shortly after the release of the US jobs report.

The US economy created 223,000 jobs in April, which was essentially in line with the 228,000 forecast, while the unemployment rate dropped to 5.4 percent from 5.5 percent in March.

Average hourly earnings increased 0.1 percent, slightly below the 0.2 percent expected. But payroll employment for February was revised from 264,000 to 266,000, and the change for March was revised from 126,000 to 85,000. With these revisions, employment gains in February and March combined were 39,000 lower than previously reported.

The dollar has yet to benefit from the news and is effectively unchanged for the session at 1.1230 against the euro. The lack of movement suggests the jury is still out on whether or not the US economy’s slow start to the year was temporary or not.

The members of the Federal Reserve’s policy board are locked in what has become an increasingly public debate on when will be the right time to raise interest rates, which have been near zero since December 2008.

Elsewhere, the Chinese trade surplus at $34.1 billion in March was up from $3.1 billion in February but below the expected $34.5 billion. As well, exports and imports both fell further than expected.

German industrial production disappointed at -0.5 percent as did the German trade balance at 19.3 billion euros. But Italian industrial production at 0.4 percent was better than expected.

Other metals fared better – platinum was last $8 higher at $1,135/1,140 per ounce, while silver was up 11 cents at $16.39/16.44. Palladium was the big mover today, hitting its highest in nearly two months at $800 – it was last at $796/801, still up $20.

 

(Additional reporting by Tom Jennemann, editing by Mark Shaw)

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