Gold recovers from losses after U.S. jobs data

By Jan Harvey

LONDON (BestGrowthStock) – Gold recovered from losses on Friday after data showed the United States added fewer jobs than expected in May, knocking assets seen as higher risk such as stocks and lifting haven buying of bullion.

The metal has benefited this year from nervousness in the financial markets amid concerns that sovereign debt problems in the euro zone could spill over into the wider economy, hampering the broader economic recovery.

Spot gold was bid at $1,204.85 an ounce at 1509 GMT against $1,206.05 an ounce late in New York on Thursday. It earlier touched a session low of $1,196.65 an ounce. U.S. gold futures for August delivery were down $3.50 at $1,206.50.

“The question is, ‘What do you want to hold in an environment like this?’ And people are answering that question today by (buying into) gold,” said Michael Widmer, an analyst at Bank of America-Merrill Lynch.

“We had a sell-off earlier today but we have now recovered most of those losses,” he added. “We went below $1,200, but gold looks reasonably well supported overall.”

The U.S. Labor Department said on Friday payrolls rose 431,000, buoyed by recruitment for the decennial census as the government hired 411,000 extra workers.

That was the largest monthly increase since March 2000 and marked a fifth straight month of gains, but it missed expectations of 513,000 jobs.

Some analysts had been anticipating an even stronger figure after upbeat data earlier this week.

The report knocked stocks, the euro and industrial commodities, with European and U.S. equities extending losses after the numbers. (.EU: ) (.N: )

The euro fell (Read more about the trembling euro. ) 1 percent against the dollar as risk appetite waned, while the U.S. currency firmed in choppy trade against a currency basket. The dollar, like gold, is often seen as a haven from risk.

Oil prices also slid more than 2 percent, while industrial metals such as copper, zinc and led fell.

INVESTMENT STRONG

Gold investment has been firm, with coin sales strong in Europe. The world’s largest gold exchange-traded fund, SPDR Gold Trust (GLD.P: ), reported a 21.3-tonne inflow on Thursday that took its holdings to a record 1,289.839 tons.

London’s ETF Securities also reported inflows of 41,423 ounces of metal into its gold-backed exchange-traded products that day, worth around $50 million.

“ETF investors’ continued willingness to load up on gold exposure provides a degree of comfort that a price floor is near,” said UBS analyst Edel Tully in a note.

Rand Refinery Ltd., the world’s largest gold refiner, said production of South Africa’s Krugerrand gold coins soared by 50 percent in a week as the euro zone debt crisis drove up investor demand.

The industrial precious metals — silver, platinum and palladium — fell after the data, in line with base metals.

Platinum slipped to $1,512.25 an ounce from $1,542.50, palladium to $427.70 from $448.50, and silver to $17.53 from $17.94.

In the longer term, platinum group metals in particular are expected to be well supported by a recovery in demand.

“Improving auto and industrial demand bodes well for both metals,” said Barclays Capital in a note on Friday. “Potential supply disruptions in South Africa could push the platinum market into a deeper deficit.”

“In palladium, continued growth in physical ETPs, particularly following the implementation of a higher ceiling for the U.S. products has the capacity to absorb excess supply.”

Stock Market Report

(Editing by Jane Baird)

Gold recovers from losses after U.S. jobs data