Gold was trading within a tight range earlier, but has surged since the number of new jobs announced failed to meet market expectations. Economists were predicting an increase of 180,000 on the payroll for September, when in fact there were only 148,000 more. This suggests to traders that the US economy is not growing at the rate policymakers would like.
It also means that it is unlikely that the US Federal Reserve’s current stimulus package of $85 billion per month will be altered until the first quarter of 2014. Traders have therefore been spurred to buy gold because a prolonged stimulus package will keep the US dollar under pressure, making the precious metal cheaper.
Investors are keeping in mind that October’s jobs data, now due in only a few weeks, may also be low, impacted by the partial US shutdown.