Gold roars following US jobs data

Strong physical demand for gold from major consuming nations also supporting the yellow metal

A sharp spurt was witnessed in gold on 2nd October 2015 as the US nonfarm payrolls came in less than expected. Strong physical demand for gold from major consuming nations also supported the yellow metal. The US employers added 142,000 workers in September, much lower than the 200,000 figures markets largely expected, and hired fewer people in July and August than previously thought. The unemployment rate stayed at 5.1% but the moderation in the recent jobs figures augured as a sign that the cautious stance of the US Fed in keeping rates at near zero percent is being justified and the US central bank could take into account these numbers when it meets again to ponder about its first interest rate hike in nearly once decade.

Gold had soared in the middle of last month following the status quo from the Fed. The US Federal Reserve kept interest rates steady due to global headwinds that could slow the economy and keep inflation subdued though the central bank kept alive the possibility of a hike before the end of the year. COMEX Gold hit a one month high of $1156 per ounce, breaking above the 100 day Exponential Moving Average (EMA). However, continued selling pressure in global crude oil prices and a modest recovery in global equities pulled gold back.

The yellow metal plummeted once the EMA 100 mark (currently placed around 1142 levels) gave up. Prices tumbled to their two week low near $1100 per ounce but witnessed a massive rebound following the tepid performance by latest US nonfarm payrolls. Physical gold demand remains upbeat and that could ensure that gold continues to see buying in dips. American Eagle gold coins advanced 125,500 ounces in September compared to 101,500 ounces in the prior month and 58,000 ounces from a year earlier. For the year-to-date, American Gold Eagle sales total 670,000 ounces. That compares to 379,000 ounces through the same period in 2014. This accounts for a massive gain of 78%. India's gold imports surged 156% on year to Rs 32261 crores in August 2015. Silver imports also surged to Rs 2364 crores, up 58.40% on year.

Gold is expected to seek cues from the US economy in the near term and unenthusiastic economic data can offer good support to the yellow metal. Global growth outlook is likely to be revised down due to weak expansion in emerging economies, according to the International Monetary Fund Managing Director Christine Lagarde. Emerging economies are no longer pulling the recovery, while developed countries are gaining momentum, Lagarde added. This can have a major bearing on Fed's stance and affect Gold too.