“As we saw with the clearly disappointing jobs report, even some bad news is not enough to shake off the positive feeling that has been driving prices higher”, he said.
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Gold futures rose 0.6% in recent trading to $1,269.90 a troy ounce on the Comex division of the New York Mercantile Exchange, according to FactSet data.
Also bullish for bullion, investors have nearly priced out the chance of a rate increase at the Fed’s June 14-15 policy review and reduced the likelihood of a July increase to about 26 per cent.
Gold rose more than one per cent to a near three-week high on Wednesday, bolstered by a weaker dollar on declining expectations that the US Federal Reserve will raise interest rates any time soon.
The U.S. ICE Dollar Index DXY, +0.54% was up 0.4% but the greenback traded mixed against its biggest rivals, having lost ground over the past few sessions in the wake of a weaker-than-expected snapshot of the employment situation issued last week.
Gold has rallied 19 per cent this year as low rates boost the appeal of the metal, which doesn’t pay interest, while a sputtering USA dollar and concerns over economic growth spur demand for bullion as a store of value.
Germany’s DAX fell 1.2 percent, while France’s CAC 40 lost 1.1 percent. Initial claims were 264,000 in the week ended June 4, lower than the 270,000 that economists surveyed by The Wall Street Journal had expected. Delaying a United States rate hike until next month (at the earliest) would provide further indication about the health of the U.S. economy and allow the Fed to fator in the impact of the UK decision whether it be for the status quo or a leap into the economic dark.
A new report from the US Labor Department released on Wednesday showed troubling trends underlying the labor market, with a decline in the number of people hired to start a new job in April.
“UK and German sovereign debt yields fell to record lows, helping to fuel gold’s rally”, HSBC analyst James Steel said in a note.
BNP Paribas’ Daniel Katzive, who is head of North American foreign exchange strategy at the French bank, noted that May jobs numbers from the US have now diminished the significance of the June FOMC meeting. It traded at $1.4541 GBP=D4, compared with Monday’s low of $1.4352.
ETF holdings of the metal are up 6.4 per cent this year to 20,067 metric tons.
Meanwhile, the gold-silver ratio has fallen to 73 on the back of the stronger silver price, its lowest level in four weeks.
Commodity prices gained overnight with spot gold rising to $US1,261 an ounce.
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“As a precious metal with an industrial character, silver is presumably also profiting from the sharp increase in metal prices”, Commerzbank analysts said in a note.
