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Gold tops $940 as jobless data fuel safety buying

MarketWatch
Last update: 2:36 p.m. EST March 6, 2009Comments: 485NEW YORK (MarketWatch) -- Gold futures rose Friday above $940 an ounce as investors sought safety in the metal after data showed the U.S. February unemployment rate soared to the highest level in more than 25 years.
Gold for April delivery rose $14.90, or 1.6%, to end at $942.70 an ounce on the Comex division of the New York Mercantile Exchange.
U.S. nonfarm payrolls shrank by 651,000 in February, the Labor Department reported Friday. The unemployment rate soared to 8.1%, the highest level since December 1983. Economists had expected job losses of 650,000 and an unemployment rate of 8%.
Over the past four months, the U.S. economy has lost more than 2.5 million jobs. See full story.
The bad economic data triggered "renewed safe-haven demand into precious metals," wrote James Moore, a precious metals analyst at TheBullionDesk.com. "However with cash liquidity still tight and given the volatile moves in equities, further gains could be limited."
Gold had tumbled 9% in eight straight sessions after it topped $1,000 an ounce on Feb. 20. Profit-taking and forced liquidation had contributed to the slump, analysts said, as some investors were forced to sell gold to cover their losses in other markets.
After Friday's gain, gold ended the week almost flat.
Also supporting gold prices Friday, the U.S. dollar fell against the euro, following the weak jobs report. A weaker dollar tends to push up dollar-denominated gold prices.
Morgan Stanley analysts said Thursday in a report that they expected gold prices will average $1,000 this year, up from the $900 they predicted earlier this year.
The Bank of England cut its key lending rate Thursday nearly to zero and announced it would launch an unprecedented program to effectively print money by buying up assets from financial institutions. See full story on BOE.
The European Central Bank also dropped its key lending rate to the lowest level in its decade-long history as it fights a deepening euro-zone recession.
"We still expect market conditions to favor gold prices, given uncertainty in both global and financial markets as well as our optimism that central banks will do whatever it takes to bolster liquidity," wrote Morgan Stanley commodities analyst led by Hussein Allidina in the report.
In other metals trading Friday, March copper rose 2.1% to $1.6805 a pound. March silver rose 1.7% to $13.323 an ounce, while April platinum added 1.3% to $1,078.70 an ounce and the March contract for palladium added 1.9% to $203.50 an ounce.
Gold holdings in SPDR Gold Shares, the largest gold exchange-traded fund, again stood at a record high of 1,029.29 tons on Thursday, unchanged for a sixth day, according to the latest data from the fund.
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4:00pm 03/06/2009

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GLD 92.29, +0.30, +0.3%) gained 0.5% to $92.45.