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Bullion climbed for the third time in four days as economic growth reflected in increased job numbers fuelled speculation on inflation; gold is a traditional hedge against inflation. Meanwhile the unemployment rate ti..

02 Feb 2013

NEW YORK (Commodity Online): US economy has added a few more jobs even as unemployment rates ticked up providing a very conducive and balanced environment for gold and silver prices to appreciate.

Bullion climbed for the third time in four days as economic growth reflected in increased job numbers fuelled speculation on inflation; gold is a traditional hedge against inflation. Meanwhile the unemployment rate ticking up from 7.8% to 7.9% solidified the impression that the US Federal Reserve would continue with asset purchase programs, also known as QE or Quantitative Easing measures.

US economy created 157000 jobs in January alone.

“The payrolls number was very good, and the Fed’s stimulating the economy creates a boost, so the thinking is that this is inflationary,” Carlos Perez-Santalla, a broker at PVM Futures Inc. in Hoboken, New Jersey, said in a telephone interview to Bloomberg News.

“The assumption is that with more money being dumped into the system, we’ll see quicker debasement of the currency.” he added.

Gold on the Comex for delivery on April 13 was seen trading at $1668.15/oz a gain of $6.15 or 0.37% as of 09.11 AM IST. Silver on the Comex for delivery on March 13 was spotted trading at $31.830/oz a gain of $0.479 or 1.53%.

“The unemployment rate ticked up a bit, and the Fed has said they’ll hold rates low until that comes down,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said to Bloomberg.

“The Fed will keep going on its mandate, and that’s helping gold.” he noted.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month—the US Federal Reserve's Open Market Committee said in a recent statement.

The Committee will closely monitor incoming information on economic and financial developments in coming months, the statement added.


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