Gold extends recovery after weak Nonfarm Payrolls report

LONDON (November 1) Gold (XAU/USD) edges up by over half a percentage point on Friday as it recovers from the tumble it suffered on the previous day. The precious metal is trading in the $2,760s after the release of US Nonfarm Payrolls data showed a decline to only 12K in October, falling well below the 113K expected and the revised-down 223K of September.

The lower-than-expected increase in workers joining the economy will ring alarm bells for the Federal Reserve (Fed) regarding the state of the US labor market, and increases the probability it will reduce interest rates more aggresively in meetings to come. This, in turn, is positive for Gold as it lowers the opportunity cost of holding the non-interest paying asset, making it more attractive to investors. 

Other data from the report showed the Unemployment Rate remained at 4.1% in October in line with expectations and the previous month; Average Hourly Earnings rose to 4.0% in line with expectations and higher than the revised-down 3.9% in September and hourly earnings on a month-over-month basis rose 0.4% versus 0.3% expected and a revised down 0.3% previously. Average Hours Worked also rose to 34.3, above expectations of 34.2, but the same as the upwardly-revised previous print. 

Gold rebounds on safe-haven flows

Gold is also rebounding on the back of a revival in safe-haven demand after hopes of a ceasefire in the Middle East war were dashed by a Hezbollah rocket attack in northern Israel that killed seven people, making it the worst strike in months, according to the BBC. Overnight there was also an intensification of the bombing of Beirut by Israel resulting in over 55 deaths, according to Al Jazeera news. That, and the risk surrounding the US presidential election given how tight the race is, continue leavening demand for the yellow metal. 

FXStreet