Gold Price Rises as Strong U.S. Payroll Growth Spurs Inflation Fears

Gold Price Rises as Strong US Payroll GrowthThe gold price moved higher on Wednesday as investors bet better-than-expected U.S. data may help inflation move back furtively into the world’s largest economy, intensifying bullion’s allure.

The gold price rise was also boosted by a decline in all of the three major U.S. stock indices following a rout in oil prices.

As of 12:11 p.m., gold for April delivery rose 0.7% to $1,239.90 a troy ounce on the Comex division of the New York Mercantile Exchange. The contract had reached $1,243 a troy ounce earlier in the session.

U.S. businesses added 214,000 jobs in February, up from 205,000 jobs added in January, Payroll processor Automatic Data Processing (ADP) said on Wednesday.

A Reuters survey had forecast a gain of 190,000 jobs.
That was regarded as another sign that the U.S. job market remains solid despite global economic sluggishness and turmoil in financial markets.

Some investors believe the data is strong enough to spur the Federal Reserve into hiking interest rates in coming months, while some other investors believe that signals a period of rising consumer prices.

The ADP report comes ahead of the U.S. government’s official jobs report due on Friday. The ADP numbers cover only private businesses and often diverge from the official figures.

The S&P 500 fell 0.3% to $1,973, the 30-member Dow Jones Industrial also retreated 0.3% to 16,817, while the tech-heavy NASDAQ Composite was 0.4% lower at 4,669.

April U.S. crude slid as much as 2% before reversing course and jumping to as high as $35.17, or 2.2%.

Among other metals, May Silver added 1.5%, copper gained 1.4%. Shaking off the trend, April platinum was flat, while palladium skidded 0.5%.

Year-to-date, gold, silver, and platinum are up 16.9%, 8.2%, and 4.9% respectively. That compared to an 8.4% drop in palladium.