Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold surged 2.1% to close above $1,136 after shockingly weak U.S. jobs data diminished the odds of a rate hike from the Fed this year, eroding the dollar and boosting demand for safe haven assets. The metal still finished the week down 0.8%.

The U.S. added merely 142,000 jobs in September, according to the Labor Department's nonfarm payrolls report, nowhere near consensus forecasts of 200,000. In another troubling sign, hiring in July and August was revised lower by 59,000 jobs.

While the unemployment rate held at 5.1%, the labor-force participation rate fell to the lowest level since 1977, indicating more workers are giving up the search than can be squared with an aging demographic. Hourly wages fell by a penny, confounding the belief that lower unemployment rates would translate into higher wages and therefore higher inflation, something urgently desired by the Fed.

Following a weak ISM report on manufacturing and a series of soft regional reports on factory output, the Atlanta Fed yesterday slashed its real growth forecast for Q3 to just 0.9% from 1.8% a few days before. Add in today's ugly jobs data and a rate hike by the Fed this month is almost certainly off the table, according to most economists, and the case for December has been severely weakened.

The dollar fell, supporting gold and other commodities denominated in for international trade, while stock markets rallied on the prospect of continued near-zero interest rates. U.S. Treasury bonds rallied alongside gold on flights to safety, with yields falling to the lowest level since April.

The other precious metals were also sharply higher for the day though mixed for the week. Silver jumped 5.2% to post a weekly gain of 1%. Platinum edged up 0.5% but still lost 4.4% for the week, weighed down by the Volkswagen diesel-emissions scandal. Palladium added 2.4% to end the week 4.5% higher.

At the Comex close: December gold surged $22.90 to $1,136.60; December silver jumped 75 cents to $15.26; January platinum picked up $4.30, to $909.50; and December palladium gained $18.20 to $697.60 an ounce.