Weak U.S. Employment Supports Gold Prices

(CEP News) - Gold prices held on to its gains as the U.S. economy shed more jobs and U.S. equity markets remain depressed.

Gold prices remained at elevated levels throughout the North American trading session. Although U.S. equities closed relatively flat on the day CBOT spot price remain in the middle of its range trading just below $940 an ounce.

According to some commodity strategists another weak reading in U.S. nonfarm payrolls helped to keep prices near its weekly highs. The U.S. economy shed 651,000 jobs in February, the fourth month in a row that job losses have been more than half-a-million. The unemployment rate rose five-tenths to 8.1%, the highest rate since December 1983, against expectations for a 7.9% rate.

Mike Glaser, futures broker at LaSalle Futures said he is expecting the weakening economy to continue to support prices. He said if prices can hold the $940 it would be a very bullish sign that prices are moving higher. A break through $960 could lead to another test of $1,000 he added.

Analysts from Citigroup are also bearish on gold prices, especially as equities continue to fall. They pointed that both stocks and houses are both in a major bear market. They wrote in a research note that the S&P 500 could fall to 360 and gold prices could rise to $2,000.

“We are seeing both major asset markets falling together for the first time since the early 1980’s,” they said. “Credit remains unavailable and chaos resumes. The only currency that is being used as a real safe haven is gold which we believe can continue to shine both in a deflationary and inflationary environment.”

WTI Crude oil is up $2.28 to $45.89 while ICE crude oil is trading up $1.25 to $44.89.

Meanwhile, ICE RBOB gasoline futures are up $1.92 to $133.19 and Globex natural gas is up $0.01 to $1.26. Heating oil at the ICE is up $7.12 to $123.10.

In the mining sector, spot gold is trading up $4.95 to $937.35 USD. In Canadian dollars, gold is up $3.22 to C$1206.81. Silver contracts at the CBOT are up $0.20 to $13.32.

Bloomberg’s index for base metals is up 1.15 points to 115.20. Wheat futures at the CBOT are up $12.00 to $527.00.

All data take at 4:22 p.m. EST.

By Neils Christensen, neilsc@economicnews.ca

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Posted in Categories: Canada, Commodities, Economy, Eurozone, Releases, USA.