Gold futures climbed to their highest levels in more than a week Friday, nearing record territory after a report that the U.S. economy didn't add any jobs in August boosted investor demand for a safe place to park cash.
The most actively traded gold contract, for December delivery, recently rose $49.30 U.S., or 2.7%, to $1,878.40 U.S. a troy ounce on the Comex division of the New York Mercantile Exchange. Futures earlier rose as high as $1,884.60 U.S. an ounce, just short of the record settlement high of $1,891.90 U.S. reached Aug. 22.
Futures extended their gains made overnight after the U.S. Labor Department reported that nonfarm payrolls were unchanged last month. Economists had expected an increase of 80,000 jobs. August marked the first time in almost a year that the economy failed to add jobs, and the labor market continues to drag on the world's largest economy.
Government employment fell, the department said, while the private sector added just 17,000 jobs. The unemployment rate, calculated from a separate survey, was unchanged at 9.1%.
The news sent investors away from perceived risky assets such as stocks and growth-sensitive commodities, and into safe havens such as gold and the Swiss franc. Some investors turn to gold during turmoil in other markets on the belief that it holds its value well during times of crisis.
Gold may be poised to set new records should the economic picture remain bleak, according to some experts.
The precious metal climbed to record highs above $1,900 U.S. an ounce last week, as worries about sovereign-debt woes and slumping growth in the U.S. and Europe sent investors seeking gold as a store of value.
The gold market has also drawn support recently from the view that central banks in Europe and the U.S. may continue to adopt accommodative monetary policies in an effort to stimulate their economies, potentially devaluing currencies. Gold is sometimes used by investors as a currency alternative, and prices have climbed since the financial crisis on the view that easy-money policies in the U.S. and Europe would devalue the world's major reserve currencies.
Renewed investor comfort with risky assets and worries that the gold market was becoming overheated after its steep climb sparked a reversal in the metal's fortunes last week, sending futures as low as $1,705 U.S. before the declines drew bargain buyers.
Gold spent much of this week shuffling in sideways trading as market players took positions ahead of Friday's jobs report.
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