Gold soars as weak U.S. jobs report cements calls for loose Fed policy

Gold soars as weak U.S. jobs report cements calls for loose Fed policy

Investing.com – Gold prices soared on Tuesday after a disappointing U.S. September jobs report strengthened expectations for the Federal Reserve to put off plans to wind down stimulus programs probably until early 2014.

Stimulus tools often weaken the dollar to drive recovery, making gold an attractive hedge.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,342.00 during U.S. afternoon hours, up 1.99%.

Gold prices hit a session low of USD1,310.10 a troy ounce and high of USD1,344.70 a troy ounce.

Gold futures were likely to find support at USD1,310.10 a troy ounce, the earlier low, and resistance at USD1,350.30, the high from Sept. 29.

The December contract settled up 0.09% at USD1,315.80 a troy ounce on Monday.

The dollar sank and gold soared after the Department of Labor said the U.S. economy added 148,000 jobs in September, well below expectations for an increase of 180,000.�

The previous month's figure was revised up to a gain of 193,000 from a previously reported increase of 169,000.

July's figure was revised down to 89,000 from 104,000.

The unemployment rate ticked down to a four-and-a-half year low of 7.2% from 7.3% in August due in part to more people dropping out of the labor force.

The jobs report published 18 days behind schedule due to disruptions caused by the recent U.S. government shutdown.

The data kept expectations going strong that the Federal Reserve will continue stimulating the economy to boost job creation by buying assets each month, and won't begin winding down the program until early 2014, later than recent calls for a December start date for tapering.

The Fed is currently purchasing USD85 billion in Treasury holdings and mortgage debt a month to boost the economy, a monetary policy tool known as quantitative easing that drives down interest rates to spur recovery and job creation, weakening the dollar in the process.

Prior to the release of the September jobs report, concerns that the government shutdown and accompanying default fears had may investors betting that any decision to taper asset purchases would come later rather than sooner, and the weak data supported those sentiments on Tuesday.

Elsewhere on the Comex, silver for December delivery was up 2.18% at USD22.763 a troy ounce, while copper for December delivery was up 1.07% and trading at USD3.339 a pound.