Posted to the web on: 09 March 2009
Commodity Report
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GOLD firmed on Friday as stock markets reversed earlier gains to fall back into the red, but trade was choppy in the wake of payrolls data showing the US economy shed more than half a million jobs last month.
Spot gold was at $940,50-$942,50/oz at 2pm from $932 late in New York on Thursday. It touched a high of $944,60 immediately after the data, which was broadly in line with expectations, before slipping to a low of $929,25.
US gold futures for April delivery on the New York Mercantile Exchange rose $14,70 to $942,50/oz.
“Gold has reacted (positively) as a safe haven to equity weakness,” Peter Fertig, a consultant at Quantitative Commodity Research in Germany, said.
The metal fluctuated after nonfarm payrolls data that showed the unemployment rate hit a high of 8,1%. I-Net Bridge
“It is the equity markets and risk aversion that are moving the market.”
The dollar extended losses against the euro after the numbers showed the US economy shed 651000 jobs last month, adding to concerns the recession is still deepening.
A weaker dollar typically lifts gold, which is often bought as an alternative asset to the currency. While the relationship has recently weakened as both assets reacted to risk aversion, it remains an important factor in the gold price, analysts said.
The underlying fundamentals of gold remain weak, however, with jewellery demand slumping and scrap supply picking up.
Demand for gold in India, the world’s largest market for the precious metal, remained slack as international prices rose for a second day on Friday, while selling of scrap stepped up as gold holders cashed in after the recent price gains.
