--Comex August gold up 3.7% to $1,622.10/oz

--Weak jobs data spark hopes of easy money

--Gold gains on weaker dollar, short covering

 
   By Tatyana Shumsky 
   Of DOW JONES NEWSWIRES 
 

NEW YORK (Dow Jones)--Gold prices roared to a three-week high Friday on speculation of fresh monetary stimulus triggered by a disappointing U.S. monthly employment reading.

The most actively traded contract, for August delivery, rose $57.90, or 3.7%, to settle at $1,622.10 a troy ounce on the Comex division of the New York Mercantile Exchange.

U.S. non-farm payrolls grew by a lackluster 69,000 in May, missing forecasts of a 155,000 gain. The unemployment rate, obtained by a separate survey of U.S. households, rose to 8.2% in May from 8.1% in April, the first increase in nearly a year.

"That's just what gold wanted to hear," said Frank Lesh, broker and futures analyst with FuturePath Trading.

Gold bugs celebrated the sour jobs data, catapulting prices up nearly $60 at one point and helping gold end at a three-week high.

"People feel that after this number, more money printing is coming," said Matt Zeman, head of trading at Kingsview Financial.

Employment is a key consideration for monetary policy decisions at the reserve bank, and many gold-market participants have been hoping that weakness in the labor market would usher in another round of quantitative easing or other stimulus measures from the Federal Reserve.

Gold prices have rallied on past monetary stimulus measures. Investors tend to flock to gold on fears that excess liquidity would erode the value of the dollar and spark inflation. Gold is widely considered a hedge against inflation and a store of value.

"While inflation is not now apparent, stimulus that may result from this turmoil is not far away," said George Gero, vice president at RBC Capital Global Futures.

Gold's rally intensified in the final half hour of trade, with futures setting fresh records as investors streamed into the market.

Gold's gains were amplified by investors who had bet on lower prices, or shorted gold, who were forced to return to the market as buyers in order to reverse those positions.

"Not only do we have new money coming into the market, but everybody who was short gold is being forced to cover today," Zeman added.

Market watchers also cheered gold's decisive grab for its mantle as a haven asset. Gold prices had traded in line with risk-based assets like equities and other commodities since last September, worrying investors. The precious metal had slumped 6% over the course of May, mirroring losses in riskier markets.

But these bonds were severed Friday, as gold prices rallied while stocks and commodities fell.

"We're seeing gold trading once again as more of a safety instrument than anything else," Zeman said.

The rest of the precious metals complex followed gold's lead, climbing Friday.

NYMEX Platinum for July delivery rose $15.60, or 1.1%, to settle at $1,433.20 a troy ounce.

Palladium for September delivery, the most active contract, edged up 10 cents to $614.00 a troy ounce.

-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; [email protected]

Source: http://online.wsj.com/article/BT-CO-20120601-711194.html