Gold Climbs on Weaker-Than-Expected Jobs Data

By Tatyana Shumsky 

Gold prices rose Wednesday, after disappointing U.S. employment data reanimated hopes that the Federal Reserve would delay raising interest rates.

The most actively traded contract, for June delivery, was recently up $8.60, or 0.7%, at $1,191.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold prices surged to $1,194 an ounce after a report showed private payrolls in the U.S. rose by 189,000 jobs in March. This was below the 225,000 new jobs economists had predicted and signaled weaker employment growth for March.

Some traders are hoping the lackluster employment data would push the U.S. central bank to delay raising interest rates, a policy shift that is widely expected in the second half of 2015. Gold has benefited from the near-zero interest-rate environment, which lets the precious metal easily compete with interest-bearing assets like Treasury bonds.

"The expectation was that they would raise rates as early as June, and a bad jobs number this month is likely to push that back," said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.

Gold traders were particularly sensitive to Wednesday's jobs data, compiled by payroll processor Automatic Data Processing Inc. and forecasting firm Moody's Analytics, because the market will be closed Friday, when the U.S. Department of Labor is scheduled to release its closely watched nonfarm payrolls report.

"With the ADP number being this bad this morning, it's got people second-guessing Friday's number," Mr. Haberkorn said.

While the two monthly employment reports don't always follow suit, investors won't have a chance to react to Friday's jobs data until electronic trading reopens on Sunday.

Write to Tatyana Shumsky at [e-mail]

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