NEW YORK (MarketWatch) — Gold futures extended a modest bounce off a six-week low, rebounding as the U.S. dollar lost ground after data showed the U.S. economy added fewer jobs than expected in July.
August gold futures GCQ4 +0.94% rose $5.30, or 0.4%, to $1,286.60 an ounce, while September silver SIU4 -0.18% rose 1.8 cents, or 0.1%, to $20.43.
The U.S. economy added 209,000 jobs in July, marking the sixth straight month of 200,000-plus gains for the first time since 1997, but coming in below the consensus forecast for again of 235,000. The unemployment rate edged up to 6.2% from 6.1%.
The dollar weakened versus major rivals in the wake of the data. Commodities priced in dollars are sensitive to movements in the currency. A stronger dollar can weigh on gold by making it more expensive to users of other currencies, while a weaker dollar can lift the commodity.
The dollar was on a tear in July, rising strongly versus major rivals as data showed the U.S. economy gaining strength and U.S. Treasury yields rose. The slightly weaker-than-expected jobs data may temper expectations the Federal Reserve will move sooner than had been anticipated to begin hiking interest rates.
Gold fell on Thursday, failing to find safe-haven support as stocks suffered a rout, with the Dow Jones Industrial Average dropping more than 300 points and turning negative for the year.
“You would expect some fund flow into the metals, with the equity price plunge, but it’s conceivable that the market’s dinosaur brain perceives a 2008 event occurring, which suggests a rush to cash,” wrote Peter Hug, global trading director at Kitco. “The metals may also be the victim of investors caught in the equity market who are trying to raise cash, due to margin calls; gold remains the most liquid asset for that purpose.”
U.S. stock index futures pared early losses Friday, posting a mixed performance ahead of the opening bell.
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