Gold rebounds on jobs, Fed easing news
Source: American Gold Exchange
-- Gold rebounded 0.7% and silver 2.5%, reversing three days of losses, as risk appetite returned following positive U.S. jobs data and news that the Fed is considering another round of monetary easing. ADP reported 216,000 jobs added in February, up from 173,000 in January, and the Labor Department revised payroll estimates higher in all but two months since July 2010, signaling a much strong labor market. Gold was additionally supported by optimism that the Greek bond-swap deal, in trouble just yesterday, may yet happen after all. The dollar fell back as the euro, equities, and commodities rallied. Platinum added 1% and palladium 2.1%.
At the close: April gold gained $11.80 to $1,683.90; May silver rose 80 cents to $33.59; April platinum added $15.40 to $1,627.30; and June palladium picked up $13.75 to $685.35 an ounce.
The big news for the gold market is that QE3 is back on the table. Fed officials are reportedly weighing what they call "sterilized" quantitative easing, in which they'd print money to buy long-term mortgage and Treasury bonds, just like in QE1 and QE2, but this time borrow the money back for short periods at low rates in order to mitigate the inflationary effects. So, just one week after Ben Bernanke's non-mention of QE3 before Congress drove 4.3% out of the gold price in one day, it's now clear that Fed officials are looking for a way to make it happen, and investors see it as positive for gold. Whether the Fed can print lots of new money and actually keep a lid on inflation, of course, remains to be seen--but it sounds good, and perhaps that's what counts as they make a case for more easing.