Poor jobs data pushes gold price higher

The Gold price as a result of a disappointing Jobs Rate from the U.S. up nearly one percent, while silver prices shot up nearly two percent. On Friday afternoon, it was announced that the U.S. economy managed to create only 151,000 new jobs in August, while analysts expected 180,000 new jobs. The figure is also disappointing compared to July, when job growth of 275,000 was achieved.

The official unemployment rate remained stable at 4.9%, while it was expected to fall further to 4.8%. This disappointing figure gives investors food for thought, because a week ago Federal Reserve Chair Yellen was still fairly positive about an interest rate hike in 2016. It remains to be seen to what extent this jobs figure will influence the decision-making of the US central bank, which will meet on September 20 and 21 for the next FOMC meeting.

Gold price up 

The rise in the price of gold reflects the increased doubts about an interest rate hike. The price rose immediately after the jobs figure to almost €1,181 per troy ounce, slightly higher than the price at the beginning of this week. The silver price shot up to €550 per kilogram, which is almost 3% higher than the price at the beginning of this week. On Thursday, there was also disappointing macroeconomic news from the United States. Industrial production fell in August for the first time since February.

The gold price reacts strongly to interest rate expectations. When it became clear that the Federal Reserve was not going to raise interest rates any further, the gold price skyrocketed and silver began a rally that peaked at €600 per kilo, the highest level since April 2013. If an interest rate hike does not materialise, the price of gold could shoot up further.

Silver price and gold price up due to poor jobs data