Gold moved sharply higher Tuesday thanks to a weaker-than-expected September jobs report - and our country's employment situation is yet another reason why gold prices are up today and will resume their climb...
Perhaps anticipating a weak number, gold prices began moving higher shortly before the jobs report. Gold moved up $5 to $1,320.80 two minutes before the release.
Following the report, gold surged.
The precious metal rose to its highest level in three weeks Tuesday, trading as high as $1,346.40, up more than $30 an ounce, or 2%, intra-day. December Comex gold finished up $24.60 at $1,340.40 an ounce. Spot gold ended up $24.80 at $1,342.
"The payrolls data is pushing gold higher as investors think the economy needs more support to gain momentum," Frank McGhee, head dealer at Integrated Brokerage Services LLC in Chicago, explained to Bloomberg.
The uninspiring data - we added only 148,000 jobs last month, compared to the 180,000 expected - is part of why the U.S. Federal Reserve won't begin tapering its quantitative easing program until well into 2014. (Another reason is the changing-of-the-chair from Ben Bernanke to Janet Yellen.) The Fed has repeatedly said it wants to see more improvement in the job market before it scales back its bond-buying program.
And jobs data is unlikely to improve before 2014.
The lackluster September employment report covered the period well before the start of the Oct. 1 government shutdown. The October employment report, set for release Nov. 8, will likely be weak, as it will reflect the impact the government impasse had on hiring. That too should bode well for gold prices.
Why Gold Is Up Today
Also supporting gold prices Tuesday was a firmly lower dollar. The greenback slid to a fresh eight-month low against a basket of currencies.
The gains are welcome for gold investors after the yellow metal slumped this year. It could see its first annual drop in 13 years.
When inflation failed to materialize after five years of rock-bottom rates and non-stop printing presses at central banks, gold lost some of its luster as a store of value.
Moreover, record stock market rallies lured investors from gold to equities. Year to date, the Dow is up 17.53%. The Standard & Poor's 500 Index is up 22.32%, and the Nasdaq is at a 13-year high, up 29.63%.
All have contributed to sharp outflows in the largest gold-backed exchange-traded fund, the SPDR Gold Trust (NYSE: GLD). Monday's data showed outflows of 10.51 tons to 871.72 tons.
But with Washington messing with the budget, and our Fed devaluing the U.S. dollar, gold holds a valuable spot in your portfolio.
In fact, we are about to reach a stage of this bull market that will slingshot the gold price to record highs. Better yet - if you're ready, you can cash in on the price surge and snag double gains.