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RTRS: PRECIOUS-Gold rushes to six-month high after US jobs data
 
By Veronica Brown and Silvia Antonioli

LONDON, Sept 7 (Reuters) - Gold raced to a six-month high on Friday, heading toward $1,730 per ounce, after U.S. jobs growth slowed more than expected in August, possibly paving the way for the Federal Reserve to pump additional stimulus into its sluggish economy.

Gold bulls went on the offensive after the numbers showed nonfarm payrolls increased only 96,000 last month.

The report's weak tenor was underscored by revisions to June and July data to show 41,000 fewer jobs created than previously reported.

Spot gold rose as the dollar weakened, hitting $1,727.65 per ounce, its strongest since late February.

U.S. gold futures also jumped to $1,726.40.

"Gold is going through the roof because this negative data makes QE3 more likely now," said Daniel Briesemann, commodities analyst at Commerzbank in Frankfurt.

"There is a chance that Bernanke will announce QE3 already next week, that means pumping more money into the market so gold becomes a more attractive investment due to inflation fears."

The market had seen giddy price action on Thursday, rushing to its loftiest since early March after the European Central Bank unveiled a new and potentially unlimited bond purchase plan to lower borrowing costs of debt-laden nations, in the latest effort to fight the euro zone debt crisis.

Central bank cash printing raises the inflation outlook and adds to gold's attraction as a hedge against rising prices.

"Investors are now betting on weaker dollar, on a potential QE3 or (more likely in my view) extended interest rate guidance into 2015 from the Fed next week," said VTB analyst Andrey Kryuchenkov.

ETF HOLDINGS

Holdings of gold-backed exchange-traded funds hit a record high of 72.1 million ounces, or 2,044 tonnes, by Thursday. ETF holdings had gained more than 38 tonnes so far this year, with the majority of the rise occurring since August when hopes for stimulus from central banks started to run high.

In Asia's physical market, dealers continued to report scrap flow as prices remained near $1,700 per ounce.

"We still see scrap flow today and there is even some buying interest crawling back in," said a Singapore-based dealer.

In other metals, silver took its cue from gold, hitting its highest since mid-March at $33.36 per ounce.

Platinum also gained traction to $1,590.74 with focus still on dominant producer South Africa.

Two percent of shift workers at Lonmin Plc's South African operations turned up for work on Friday, the platinum miner said.

The world's third-largest platinum miner has been crippled by a four-week strike at its Marikana operations. The company signed a "peace deal" with some of its unions on Thursday. However, that did not include militant breakaway union AMCU. (Additional reporting by Rujun Shen in Singapore; Editing by Alison Birrane)
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