Weekly Round-Up: Gold Price Spikes on US Jobs Report

The gold price spiked on the release of a weak US jobs report Friday, jumping from about $1,105 per ounce up to a high of $1,139.40. 
Kitco’s Jim Wyckoff describes the report as “surprisingly weak,” noting that only 142,000 new non-farm jobs were created in September. That’s “well below the 200,000 rise that was expected.” The unemployment rate remains at 5.1 percent.
The report’s impact was felt elsewhere as well. A Wall Street Journal article states that the Down Jones Industrial Average (INDEXDJX:.DJI) sunk 97 points, or 0.6 percent, in midday trading, while the S&P 500 (INDEXSP:.INX) fell 10 points, or 0.5 percent, and the NASDAQ Composite (INDEXNASAQ:.IXIC) declined 14 points, or 0.3 percent. Meanwhile, the yield on the benchmark US Treasury note fell below 2 percent for the first time since August 24.

Of course, the disappointing report has also cast doubt on whether the US Federal Reserve will raise interest rates this year, with many now seeing that as unlikely.
“This report put a major obstacle to the Fed’s path of raising rates,” Gary Pollack, head of fixed-income trading at Deutsche Bank’s (NYSE:DB) private wealth-management unit, told the Wall Street Journal. “The Fed could wait until 2016 to raise rates and bond yields have room to fall.”
Similarly, Bart Melek, head of commodity trading at TD Securities, told Kitco that in fact there’s only a 52-percent chance that the Fed will raise interest rates by March 2016. “That is still pretty low odds. With expectations being pushed back further and further, we think ultimately gold can reach $1,190 in the medium term,” he said.
For its part, the silver price reacted much the same to Friday’s jobs report. It rose from about $14.45 per ounce to a peak of $15.28 after the report was released.

Looking to base metals, copper also saw some positive price action this week. The red metal climbed as much as 4.5 percent on Tuesday after news that annual copper output at the Collahuasi mine — owned by Anglo American (LSE:AAL) and Glencore (LSE:GLEN) — will be cut by about 30,000 MT. Ultimately, LME copper for three-month delivery settled up 3.8 percent, at $5,160.
“The announcement to cut production will help support copper prices. It’s not just been a bad quarter for copper, it’s been a pretty bad year too,” Daniel Briesemann of Commerzbank (ETR:CBK) told Bloomberg.
Finally, oil prices took a hit on the jobs report, with WTI crude for November delivery sinking 1 percent, to $44.28 per barrel, on the NYMEX. The contract is down 3.2 percent for the week, as per MarketWatch. Similarly, Brent crude for November delivery fell 1 percent, to $47.87, on the ICE.
Investors are concerned that the disappointing report points to the potential for weaker energy demand.
 
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 
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