Gold News & Info

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.6% to close above $1,216 as December's non-farm payrolls report supported speculation that the Fed will be slower to raise interest rates. The metal finished the week 2.5% higher, bouyed by safe-haven demand because of slowing global growth and heightened concerns that Greece may exit the euro.

The U.S. economy created 252,000 new jobs last month, the Labor Department reported today, plus a combined 50,000 more than previously estimated in the prior two months. December was the eleventh straight month with more than 200,000 new jobs, bringing the yearly total to 2.95 million, the most since 1999.

The otherwise upbeat report was shadowed by a shrinking labor force and falling wages. The unemployment rate dropped to 5.6% from 5.8%, but more people gave up looking for work, driving the participation rate to the lowest level since 1978. More alarming, the average hourly wage for jobholders fell by the most since 2006. Now rising by just 1.7% per year, around two-thirds of normal, wages are just are barely keeping ahead of inflation.

Low wages and low inflation are causing prominent Fed members to suggest postponing increases in interest rates until late 2015 or 2016. Chicago Fed President Charles Evans said the new data confirms his view that rates should stay near zero until 2016, adding that wage growth should be "in the 3% to 4% range." Separately, Dennis Lockhart of the Atlanta Fed said today the central bank should still "take the risk of being a little late" in raising rates.

The minutes from the Fed's last meeting, released this week, were already touting "patience" in determining when to tighten. And Minneapolis Fed President Narayana Kocherlakota yesterday called for leaving rates steady for another year, at least, because of low inflation and still-high unemployment.

The bond market, too, is signaling that the Fed will stay on hold until next year. The spread between short-term and long-term U.S. Treasury yields, known as the yield curve, has widened over the past two days to the point where bond traders anticipate no rate increase until 2016, according to Marketwatch. Low rates support higher gold prices by suppressing the dollar's relative strength and driving up demand for the metal as an alternative store of value.

U.S. and global equities retreated, with the Dow dropping nearly 1% and the Global Dow 0.7%. The dollar fell against most major rivals, supporting higher prices for precious metals and other commodities denominated in it for international trade.

Silver edged up 0.2% for a 4.2% rise this week. Platinum rose 0.6% today and 1.9% this week. Palladium jumped 0.8% to finish 0.6% higher for the week.

At the Comex close: February gold gained $7.60 to $1,216.10; March silver edged up 3 cents to $16.42; April platinum rose $7.10 to $1,230.10; and March palladium jumped $7.05 to $800.15 an ounce.