Gold price shrugs weak US jobs

On Friday gold futures received an initial jolt after a US jobs report that came in way below expectations, but the buying soon dried up with the metal continuing to drift near 12-week lows by the close.

In afternoon trade on the Comex division of the New York Mercantile Exchange gold for December delivery was changing hands for $1,267.30 an ounce, up less than a $1 an ounce compared to yesterday's closing price.

The metal hit a day high just shy of $1,275 shortly after the news broke that the US economy created only 142,000 jobs in August, much lower than the expected an increase of 228,000 on non-farm payrolls.

It was the smallest gain since December and while the unemployment rate ticked down to 6.1%, that was mostly as a result of people stopping to look for work and dropping out of the labour pool.

Scott Carter, CEO of gold and silver broker Lear Capital, told he was surprised by the subdued reaction of the gold price, but not by the evidence of continuing economic weakness in the US.

"I've been a contrarian all year and issues like the participation rate should give the Fed pause. I'd be surprised if we get a rate hike before the third quarter of the next year," says Carter.

Los Angeles-based Lear Capital does around $250 million in revenue on the physical gold and silver market and Carter believes the disconnect between the paper and physical market in precious metals will correct itself.

"The paper market is keeping a lid on the price, but gold has built a solid base this year. It won't take much to cause a serious break out," says Carter, who believes further European economic shocks or a 10% – 20% US stock market correction could be the trigger that send money back into gold.

Carter says he recently forecast gold to end the year at $1,450 an ounce and although he's less convinced of that price today, 2014 is likely to be an up year: "And with the right catalyst, gold could easily end the year up 15%".

The gold market has been uncannily quiet this year trading in an 8%-band since April but almost half the time the daily close has been within 1% of the average price of $1,296 an ounce during this time.

Year to date the metal is up just over 5%, recovering from a 2013 performance which was the worst in more than three decades.