Gold hits six-week high after disappointing US non-farm payrolls data

NEW YORK/LONDON — Gold prices rose to a six-week high on Friday after disappointing US non-farm payrolls data weighed on the dollar and lowered expectations for more aggressive US interest rate increases this year.

Data showed that US job growth slowed in May and employment gains in the prior two months were not as strong as previously reported, suggesting the labor market was losing momentum.

A slow recovery in the world’s biggest economy dents the likelihood for higher interest rates which benefits non- interest yielding and safe-haven gold.

Spot gold was up 1% at $1,277.76 per ounce by 3:34 p.m. EDT (1934 GMT), after hitting its highest since April 21 at $1,279.10 and was headed for its fourth week of gains.

US gold futures ended the session up 0.80% at $1,280.20 an ounce.

“You had that non farm payrolls number that surprised everyone so at this point it looks like the market wants to continue higher,” said Joshua Graves, markets strategist at RJO Futures.

“I feel like $1,300 is probably going to be the next stop… At this point with the market getting a little bit toppy up here, I think you’re seeing a little bit of a flight to safe-haven assets.”

Expectations for stronger jobs data and upbeat data from US factory activity had pushed gold to a one-week low earlier on Friday.

“There is good room to fall back to $ 1,200 within the next three months,” Dominic Schnider at UBS Wealth Management in Hong Kong, said.

“The world economy is still in good shape, people are risk- on, inflation is leveling off, there is no real big inflation threat anymore, policy is normalizing still.”

However, the upcoming June 8 elections in Britain and more political unrest possible in the US, North Korea, Greece, Venezuela, and Brazil is likely to keep bids in bullion, seen as a safe-haven asset, analysts said.

In other markets, US stocks advanced to record levels for a second straight session while the dollar dropped to seven-month lows, making gold less expensive for holders of other currencies.

Among other precious metals, palladium was up 2% at $839.75 an ounce after earlier touching $ 843.10, its highest level since September 2014, silver rose 1.70% to 17.54 per ounce after hitting a more than one-month high while platinum firmed 2.40% to $949.60.

The rise in prices also boosted chances that the precious metals share index, Philadelphia SE Gold/Silver Index would have its own upside breakout.

The XAU index was up 0.60% and looked to attack its own resistance.