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Gold Futures Have Biggest Gain in a Month as Jobs Report Spurs Dollar Drop
Feb. 6 (Bloomberg) -- Gold futures in New York had their biggest gain in a month after a report showing unexpectedly slow U.S. job growth sent the dollar lower against the euro, boosting the appeal of the precious metal as a store of value.
U.S. companies added 112,000 jobs last month, the Labor Department said, fewer than the median estimate of 175,000 in a survey of economists by Bloomberg. Gold fell yesterday on speculation that accelerating job growth would prompt the Federal Reserve to raise interest rates from a 46-year low, boosting the value of the dollar.
The jobs report put ``buying interest back in gold,'' said David Rinehimer, an analyst at Citigroup Global Markets Inc. in New York. ``Anything that suggests a continuation of the low interest-rate environment is negative for the dollar.''
Gold for April delivery rose $7.70, or 1.9 percent, to $406.50 an ounce at 9:39 on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest gain for a most-active contract since Jan. 5.
Gold had jumped 20 percent in the 12 months through Jan. 6, when the futures reached a 15-year high of $431.50 an ounce. The dollar slid 18 percent against the euro in that same period.
The dollar fell to a two-week low against the euro today. Some traders had expected the job increase to exceed forecasts because of comments made yesterday by Fed Governor Ben S. Bernanke. Speaking in South Carolina, Bernanke said that large- scale hiring in the U.S. will occur ``not too far from now.''
In the past three months, gold has moved almost in lockstep with the euro's performance against the dollar at a correlation coefficient of 0.9. The maximum reading is 1. The coefficient measures how often and to what degree two variables move in unison.
Shares of gold-mining companies also gained. The Philadelphia Stock Exchange Gold & Silver Index of 12 mining companies rose 2.6 percent to 98.74. Shares of Denver-based Newmont Mining Corp., the world's largest gold producer, rose $1.02, or 2.4 percent, to $43.17 in New York Stock Exchange composite trading.
To contact the reporter on this story:
Choy Leng Yeong in the Chicago newsroom clyeong@bloomberg.net
To contact the editor of this story:
Steve Stroth at sstroth@bloomberg.net.
Last Updated: February 6, 2004 09:49 EST