Gold back to safe-haven territory
Gold for August delivery added $57.90, or 3.7%, to finish at $1,622.10 an ounce on the Comex division of the New York Mercantile Exchange.
For the week, futures prices were 3.4% higher, based on a closing basis for the most-active contract.
The U.S. added just 69,000 jobs in May, the smallest net increase in a year, according to a government report. Economists expected more than double that figure increase. Growth figures in payrolls were also lower for April and March. Meanwhile, May’s unemployment rate rose to 8.2% from 8.1%.
Following the jobs data, not only quantitative easing is expected in the U.S., but also tax revenue dilemmas due to growth limitations, the U.S. budget concerns. If this occurs, then gold is very much likely to rally this summer. If no actions are taken, then gold would remain under pressure due to the return of deflation.
Silver futures followed gold higher, with July silver tacking on 76 cents, or 2.7%, to close at $28.51 an ounce, around 0.4% higher than its closing price last Friday.
Elsewhere, over in China surveys of manufacturing activity for May also pointed to deteriorating conditions.
This is the second month the U.S. jobs data is disappoints, which is an indicator that significant downturn is underway. Concerns about the third quarter data are on the rise.
Market players speculated for sometime now over the next round of quantitative easing that will be served up to the markets. Gold has been the first to react to this prospect, sparking a rebound in other commodities.
Gold futures ended lost altogether 6% during May.
The disappointing jobs data could be the first sign of a shift in gold back to safe-haven territory.
