Gold Gains in New York After Jobless Claims Unexpectedly Rise

There was an unexpected rise in jobless claims today causing gold to rise for the first time in three days as investors look towards the metal as a safe haven asset. Jobless claims rose by 2,000 last week according to the Labor Department.

By Debarati Roy and Nicholas Larkin
September 08, 2011, 10:58 AM EDT
Businessweek

Sept. 8 (Bloomberg) -- Gold gained for the first time in three days after an unexpected rise in U.S. jobless claims spurred demand for the metal as a haven asset.

Claims for unemployment benefits rose by 2,000 to 414,000 in the week ended Sept. 3, the Labor Department said. Economists surveyed by Bloomberg News projected a drop in claims to 405,000, according to the median forecast. Before today, the metal was up 28 percent this year as waning prospects for global growth boosted investor demand.

“Things aren’t looking very positive, and the market continues to remain skittish,” Adam Klopfenstein, a senior market strategist at MF Global in Chicago, said in a telephone interview. “We need some results to show that jobs will be created.”

Gold futures for December delivery gained $34.70, or 1.9 percent, to $1,852.30 an ounce on the Comex at 10:33 a.m. in New York. The price touched a record $1,923.70 on Sept. 6.

The precious metal is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. European Central Bank President Jean-Claude Trichet said today that risks to the economic recovery have intensified.

Gold will average $2,075 next year, up from a previous estimate of $1,380, UBS AG wrote in a report yesterday. The Zurich-based bank raised its 2011 outlook to $1,665 from $1,500.

“The main trend is that things will remain poor from a macro perspective, and that will support gold,” Dan Smith, an analyst at Standard Chartered Plc in London, said today by telephone. “We’re heading into a good period for seasonal demand, and people are taking the opportunity to pick up gold on these dips.”

Silver futures for December delivery rose 61.4 cents, or 1.5 percent, to $42.245 an ounce on the Comex.

--With assistance from Robert Willis in Washington. Editors: Millie Munshi, Steve Stroth

To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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