Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— With U.S. exchanges closed for Good Friday, spot gold in London gained half a percent in thin trade today after the March U.S. non-farm payrolls report came in far lower than expected. Job growth tumbled to merely 120,000 , the smallest gain since October, after averaging more than 250,000 in January and February. Most economists projected gains of at least 200,000. U.S. stock futures promptly dropped by more than 1% and the dollar lost 0.4% on the news. Spot silver was little changed.

Earlier in the week, gold prices plunged when the minutes of the March FOMC meeting revealed the disinclination of many voting members to pursue more easing unless economic conditions markedly deteriorate. Fed Chairman Ben Bernanke has repeatedly stressed job creation as the litmus test of the recovery, warning that recent payroll expansions remain fragile. So today's abysmal jobs report, while not a game-changer in itself, probably increases the odds in favor of another round of easing. As we've said before, QE3 would be bullish for gold because it weakens the dollar and increases long-term inflation risk. Gold surged by around 85% under QE1 and QE2, which injected some $2.3 trillion of extra liquidity into the economy.