GOLD UP 2.4 PCT ON GOVT SHUTDOWN, JOBS DATA BELOW FORECAST

GOLD UP 2.4 PCT ON GOVT SHUTDOWN, JOBS DATA BELOW FORECAST

NEW YORK/LONDON, Oct 2 (Reuters) – Gold rose more than 2 percent on Wednesday as a drop in the dollar and a fall in U.S. equities sparked bargain hunting that recouped most of bullion’s tumble the previous session.

Gains in the precious metal accelerated after data showed U.S. private employers added fewer jobs than expected in September, according to payrolls processor ADP, underscoring steady but still sluggish growth in the labor market. (Full Story)

A partial government shutdown in Washington entered a second day, adding to concerns over how soon a political compromise would be reached. Congress must also agree to raise the debt limit in coming weeks or risk a default that could roil global markets.

“The market is jittery because of the government shutdown. If the economy numbers continue to be weaker than expected, we may see a slide in the dollar, and money in equities flow back into Treasuries and metals for the time being,” said Tom Power, senior commodities trader at futures brokerage R.J. O’Brien.

In a reversal of Tuesday’s market, the S&P 500 index  .SPX fell while safe havens such as U.S. Treasuries and gold rose. .N US/

Spot gold  XAU= was up 2.4 percent to $1,316.41 an ounce at 2:44 p.m. EDT (1844 GMT), rebounding some $40 from a two-month low at $1,278.24 earlier in the session.

U.S. gold futures for December delivery  GCZ3 settled up $34.60 at $1,320.70 an ounce, with volume about 5 percent above its 30-day average, preliminary Reuters data showed.

Gold’s inflation-hedge appeal was boosted after the European Central Bank’s chief said the ECB is watching moves in market interest rates closely and is ready to use any policy option to temper them if needed. (Full Story)

FED TAPERING, BUDGET CRISIS EYED

Bullion’s safe-haven status is usually burnished by economic uncertainty and geopolitical tension. Prolonged U.S. budget talks could lift gold’s prices, as this keeps pressure on the Federal Reserve to maintain its monetary stimulus for an extended period of time.

On Wednesday, President Barack Obama planned to meet with congressional leaders with the deadlock in Washington showing no signs it will end in the near future. (Full Story)

Slow growth and a weak jobs market mean the U.S. economy will continue to need support from accommodative monetary policy for years to come, top U.S. central banker Boston Federal Reserve Bank President Eric Rosengren said on Wednesday. (Full Story)

On Tuesday, bullion posted its biggest daily percentage drop in more than two weeks, following a big Comex sell order and technical selling once prices fell below $1,300 an ounce.

The sharp slide in the previous session stirred market talk of forced liquidation by a distressed commodities fund and of selling related to a fund rebalancing on the first day of the fourth quarter, although the talk could not be confirmed.

Among other precious metals, silver  XAG= rose 2.9 percent to $21.73 an ounce. Platinum  XPT= was up 1 percent to $1,388.25 an ounce and palladium  XPD= gained 0.3 percent to $717.38 an ounce.

The platinum group metals market now focuses on Thursday’s talks to seek an end to a strike that has brought most of the operations of South Africa’s Anglo American Platinum  AMSJ.J to a standstill for nearly one week. (Full Story)

 

2:44 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT

SETTLE   CHNG  CHNG                       VOL

US Gold DEC   1320.70  34.60   2.7  1276.90 1324.20  164,542

US Silver DEC  21.897  0.722   3.4   20.990  22.040   38,388

US Plat JAN   1393.40   8.10   0.6  1378.50 1400.90   10,374

US Pall DEC    721.20   2.30   0.3   712.10  722.60    3,130

 

Gold          1316.41  30.42   2.4  1279.15 1323.21

Silver         21.730  0.620   2.9   20.990  21.990

Platinum      1388.25  13.65   1.0  1381.00 1394.24

Palladium      717.38   2.38   0.3   714.52  720.00

 

TOTAL MARKET              VOLUME          30-D ATM VOLATILITY

CURRENT   30D AVG  250D AVG   CURRENT     CHG

US Gold        168,132   162,650   189,283     23.18   -1.01

US Silver       40,030    60,247    58,610     35.14    1.70

US Platinum     10,612    14,501    12,978     20.36    0.00

US Palladium     3,227     6,102     5,806