Gold Steadies After U.S. Data


"Overall sense of caution should still be supportive for gold."

Gold steadied Friday as data showing the U.S. non-manufacturing sector grew in August at a slower pace than July helped offset a stronger-than-expected U.S. non-farm payrolls reading to lift gold's haven appeal. Silver climbed, meanwhile, to hit its highest since March 2008.

Spot gold was bid at $1,249.80/oz. at 1542 GMT, off a low of $1,235.70/oz., against $1,250.74 late in New York on Thursday. U.S. gold futures for December delivery fell $2.80 to $1,250.50.

An industry report released on Friday showed the U.S. non-manufacturing sector grew in August for an eighth straight month but at a slower pace than July and at a rate that was below expectations.

This helped counteract the positive impact on risk appetite of an earlier release showing that, while U.S. employment fell for a third straight month in August, the decline was far less than expected.

"Non-farm payrolls data has come out much better than expected—the consensus was for job losses of about 100,000, it has come out at 54,000," said Societe General Analyst David Wilson. "Gold is losing a bit of momentum."

However, recent U.S. data has tended to still point toward a relatively soft recovery, he said. "There is still an overall sense of caution, which should still be supportive for gold."

Gold has benefited in recent weeks from concerns that weak growth would push the Fed into further quantitative easing measures, which could ultimately prove inflationary.

The dollar fell vs. the euro in the wake of the data, though it climbed vs. the Japanese yen as the numbers boosted appetite for higher-yielding currencies.

Stock markets rose to a fresh three-week high in Europe after the jobs report surprised on the upside, though they later pared gains after U.S. ISM data. U.S. stock markets were also higher.

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