HomeBusinessWeak United States jobs numbers support gold

Weak United States jobs numbers support gold

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SINGAPORE – Gold extended gains to a second session yesterday, boosted by a disappointing United States nonfarm payrolls report that eased concern about an early interest rate increase, with investors also eyeing developments in the Ukraine crisis.

Spot gold had ticked up 0,2% to $1 271,09/oz, following a 0,6% gain on Friday after data showed US employers hired the fewest number of workers in eight months in August.

The metal also remained well-bid as Asian shares edged down yesterday, taking little comfort from mixed Chinese trade data, but volumes were thin as markets in China, the top buyer of bullion, were closed for a holiday.

“Gold found some support as the case for a more cautious Fed was strengthened following slower US jobs growth in August,” ANZ analyst Victor Thianpiriya said.

Weak data on the strength of the economy could prompt the US Federal Reserve to be cautious about raising interest rates. An increase in rates would dull the demand for noninterest yielding assets such as gold.

Other traders said developments in Ukraine were being watched to see if the ceasefire agreed with the pro-Russian rebels would hold up.

Fighting has already flared up in eastern Ukraine overnight into Sunday, killing one woman and injuring at least four people and jeopardising a ceasefire struck less than two days earlier.

Any worsening of the crisis, which has caused the sharpest confrontation between Russia and the West since the Cold War, could boost gold as it is seen as an alternative investment during times of political and financial uncertainty.

For now, the strength in the dollar is souring demand for bullion. Hedge funds and money managers decreased their bullish futures and option bets in gold for a third consecutive week to the lowest since June, the Commodity Futures Trading Commission said on Friday.

Physical demand picked up last week as gold fell to a near three-month low, also lending some support to prices.

-Reuters

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