Gold and silver futures edge higher as compared to the steep losses of U.S. jobs news renewed concerns about inflation pressures. Data showing that U.S. nonfarm payrolls rose by 244,000 last month, as the private sector posted the strongest employment gain in five years restored some confidence about the recovery in the world’s largest economy. That renewed a switch to gold as some investors continue to believe rising consumer and producer prices are on the horizon amidst loose monetary policy.
“There is a bit of inflation play,” said Sterling Smith, an analyst with Country Hedging.
The metals were also wins the increased interest in riskier assets under pressure from the U.S. dollar, boosting demand for the dollar-denominated metals from foreign buyers.
The most actively traded gold contract for June delivery was recently up $ 13.10, or 0.9%, to $ 1,494.50 a troy ounce on the Comex division of the New York Mercantile Exchange. The nearby May contract was up $ 12.40, or 0.8%, to $ 1,493.30.
July silver fell 5.5 cents, or 0.2%, to $ 36 185 a troy ounce, while May silver was off 10.6 cents, or 0.3%, at $ 36,125. Although well up from intraday low, the metal remains in a falling and rising trading deposit requirements, known as margins continue to force investors to sell off the market. July silver sank so far $ 33,035, the lowest intraday price since Feb. 25.
Yet investors are not abandoning the precious metals in total.
At the same time it issued the payroll figures, the Labor Department said the U.S. unemployment rate – obtained from a separate survey of households – rose to 9.0% last month from 8.8% in March. It was the first rise in unemployment since November, when it hit 9.8%.
Supported gold and silver as a safe haven in times of economic uncertainty.
The mixed data were not what analysts expected. Economists had forecast payrolls would rise by a smaller 185,000 and the unemployment rate would remain unchanged at 8.8%.
“The economy may well recover, but until we see further evidence, I’m not going to do anything but even,” George Gero, vice president with RBC Capital Markets Global Futures, said traders think. “They want to stay in gold as a safe haven.”
Ultra-low interest rates have boosted the allure of interest-bearing-bearing precious metals, and the Federal Reserve purchases of Treasurys the economy have caused some believe that the central bank is unable to sop up extra liquidity over time avoid problematic inflation over the longer term.
The recent pullback in commodity prices amid concerns about the global economic recovery may be easily pierced expectations that monetary policy can remain in place longer.
“The decline in commodity prices, central banks put at ease and keep their low tariff policy in place for some time,” said MF Global analyst Tom Pawlicki.
source:onlinewsj
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