, IncMarch 5, 2010 – Although the nonfarm payrolls report slightly exceeded expectations, gold prices continued moving upward today, with 12:00 PM EST prices rising $4.50 to stand at $1,138.00 per ounce.
In the latest report by the Department of Labor, the nonfarm payrolls only lost 36,000 additional jobs, down from the expected 68,000. The announcement was also made that the unemployment rate dropped 0.1% to 9.7%. Unemployment does not directly affect gold prices, but it is an indicator of continued weakness in the US economy.
Since 1950, according to Macquarie’s equity research team, the Federal Reserve has never raised interest rates with unemployment above 7.7%. This historical trend is confirmed by Fed Chairman Ben Bernanke’s comment that it is necessary to continue “exceptionally low” interest rates for an “extended period” of time. This commitment to low interest rates and a low inflation rate are credited by many analysts with contributing to the current increase in gold prices.
As PIMCO’s Bill Gross states, “Inflation expectations remain relatively subdued, providing the Fed cover to delay the normalization of monetary policy. Negative real interest rates have historically been associated with gold bull markets and the longer real rates trade below zero the faster the currency degradation - all of which provides a tailwind for a higher gold price.”
Gold prices are likely to benefit as the current unemployment rate stays near 10% and the Fed’s continues its efforts to keep rates low for an extended period of time, so check GoldPrice.net often for updates or subscribe to our RSS feed to stay up-to-date with the latest economic news.
Ronald Stevens
Senior Staff Writer - GoldPrice.net
