Information of derivative market: Gold Jumps 3 Percent as Jobs Gloom Spurs Safety Bid

By: Reuters

Gold surged nearly 3 percent on Friday, hitting its highest level since last week's record, as investors sought refuge in safe haven assets following a bleak U.S. labor market report.

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Some investors viewed the lack of jobs growth in August as a sign the world's largest economy may be heading back into recession, heightening demand for gold. Some said it increased the odds of more stimulus from theFederal Reserve when it meets on Sept. 20-21, also a positive for bullion.

"I think there was a great deal of disappointment with the employment numbers and that kicked off speculation of further quantitative easing or some sort of monetary response," said HSBC metals analyst and senior vice president James Steel.

Spot gold [XAU= 1883.80

0.10 (+0.01%)

]was last up $51.34 per ounce or 2.8 percent at $1,875.89 an ounce. It earlier rose to a high of $1,879.30, its highest level since hitting a record at $1,911.46 on August 23.

Gold had notched up a sizable portion of the day's gain prior to the data, with traders having braced for yet another downbeat report ahead of the Labor Day holiday weekend. Trading volume picked up slightly from a week of subdued activity.

"It was pretty much a one-way trade after the jobs report," Steel said.

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Along with gold, the rush to hold safe assetsset off a rally in U.S. Treasury securitiesand the U.S. dollar dropped against the Swiss franc and yen.

U.S. employment growth ground to a halt in August, as sagging confidence discouraged already skittish businesses from hiring. Jobs creation in July and June were trimmed by a total of 58,000 jobs, and the unemployment rate stood at 9.1 percent.

The jobs data, the worst in nearly a year, put more pressure on the U.S. central bank's policy-setting committee, which meets next on September 20 and 21, having extended its confab to two days to allow time to examine all available options for boosting U.S. growth.

"Today's figures are very poor and will intensify pressure for strong policy action - possibly further QE (quantitative easing )," Ross Norman of Sharps Pixley said in a note.

Debt Troubles

Growing worries about Greece's ability to meet its deficit targets also helped underpin gold prices.

In the latest twist in Greece's debt saga, talks between Athens and international inspectors on whether it has met conditions for a new aid tranchehave been put on hold, after disagreements over why and by how much its deficit cuts program has fallen behind schedule.

"We're seeing a new round of flight into so-called safe haven assets. The debt problems in the euro zone are still a worry and it offers an opportunity for market speculators to buy gold," said Peter Fertig, a consultant at Quantitative Commodity Research.

Gold has risen 2.1 percent so far this week, reversing a sharp correction

in the previous week. Some analysts expect a degree of short-term correction in the precious metal after its strong run in early August.

"Some consolidation here is healthy for gold as we simply need more clarity on the macro side to determine if riskier bets are on or off this autumn," VTB Capital said in a note.

"Otherwise, in the longer run bullion is still well supported as investors are afraid to liquidate their longs amid ongoing policy uncertainty in both the U.S. and the eurozone."

Spot silver [XAG= 43.19

-0.01 (-0.02%)

] last tracked gold to rise 3 percent to $42.69 an ounce, following a 3.2 percent fall in the previous week.

Bolivia, the world's sixth-largest silver producing country by output in 2010, plans to raise mining royalties to take advantage of high prices and bolster the state's role in the industry.

Elsewhere, spot platinum [PLCV1 1884.80

31.90 (+1.72%)

] rose 1.4 percent to $1,869.24 an ounce, while spot palladium [PACV1 783.20

-7.20 (-0.91%)

]slipped 0.5 percent to $775.50 an ounce.