LONDON (Commodity Online): Prices closed the week on a positive note, led by gains in silver. The weaker-than-expected US non-farm payrolls boosted safe haven interest in both Gold and silver. Silver prices gained over 4% to close above $43/oz, while gold prices gained 3% to finish the session above $1880/oz, their strongest levels since 22 August. The August US employment report took on a very soft tone as non-farm payrolls went unchanged on the month and private payrolls added only 17k.
The flat reading on nonfarm payrolls was well below consensus (68k). Our economists note the temporary factors restraining growth in Q2 have eased, and consumer spending rebounded smartly in July but given the labour market weakened, further monetary policy action in September is now more likely than not. Longer-term investor interest in gold stabilised last week and the largest product, SPDR, was unchanged at 1232.3 tonnes on Friday.
In terms of short-term interest, the latest CFTC data for the week-ended 30 August revealed tactical investors scaled back exposure across all precious metals. Net fund length in Comex Gold fell for the fourth straight week to its lowest level since the start of July. Noncommercial gold positions fell 10.7k lots, as short covering activity (10.7k lots) was more than offset by the liquidation of long positions (21.4k lots). However, speculative positions remain firmly in positive territory, and the market is not over-extended despite elevated price levels.
Net fund length in Comex Silver was down by a modest 0.2k lots as longs and shorts were reduced in almost equal measure, while non-commercial positions in PGMs were scaled back predominantly as long positions were liquidated.
