Weak job report imparts shine to bullions
Bullion prices ended higher on Friday, 10 January 2014. This was after U.S nonfarm payrolls came in far below expectations on Friday, boosting gold's investment appeal and lifting prices for the precious metal to their highest close in four weeks.
February gold extended Thursday's gains as it popped from its session low of $1226.60 per ounce and continued to trend upwards. It eventually settled 1.4% higher at $1246.60 per ounce, booking a weekly gain of 0.7%.
March silver rallied off its session low of $19.66 per ounce and consolidated near the $20.10 per ounce level until late afternoon pit action. It settled 2.8% higher at $20.23 per ounce, gaining 0.1% for the week.
Prior to the open, it was reported that job growth slowed considerably in December with the addition of just 74,000 jobs. This was well below the consensus, which called for a reading of 197,000. The unemployment rate plunged to 6.7% from 7.0% but that was a result of another sharp drop in the labor force participation rate. Furthermore, aggregate wages fell 0.1% after increasing 0.7% in November. The drop is expected to put downward pressure on consumption growth unless consumers decide to lower their savings rate.
Outside of the aforementioned nonfarm payrolls, investors received another data point on Friday. In November, wholesale inventories increased 0.5%, down from a 1.3% (from 1.4%) gain in October. The consensus expected wholesale inventories to increase 0.2%. Inventory growth over the past few months has been extremely strong, yet similar gains in sales suggest inventory growth trends can remain on the current path. Sales rose 1.0% in November after increasing 1.1% in October.
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