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Sunday, December 16th, 2018 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

The Comex Gold Rally: Fueled By Catastrophic Jobs Report

Increased speculation that the Fed may resort again to quantitative easing to boost employment , as a result of a saddening US jobs report, is the main reason why Gold on the Comex division of the New York Mercantile Exchange gained 0.8 percent on Friday.

Gold futures for August delivery were recently up $11.60 at $1,542.20 per ounce in New York. Trade has ranged from $1,525 to $1,546.

US non-farm payrolls delivered their weakest reading since September, with an increaso of only 18,000 last month, extremely below expectations of a 97,000 gain. The national unemployment rate rose to a six-month high of 9.2 percent, up from 9.1 percent in May.

Furthermore, the ratio between employment and the population declined to the lowest level ever recorded, 58.2 percent.

“This is pretty much a catastrophe,” Sterling Smith, an analyst with Country Hedging, said. “When you take out the birth/death adjustments and look at people actually working, this report is noticeably and demonstrably worse than what it appears to be from the headline number.”

The market immediately shifted into risk-off mode,  with investors moving wealth into safe-haven assets, such as gold, thus causing a significant impact on gold prices.

This risk reduction mindset is evidenced by the fact that the Dow Jones Industrial Average, S&P 500 and Nasdaq each dropped more than one percent following the release of the report.

But, more specifically, the poor jobs report puts pressure on the US Fed to at least consider pumping more liquidity into the system via a third round of quantitative easing (QE3) or some other form of monetary loosening, Smith said.

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