Investing.com – Gold futures eased from session highs in Asian trade Friday, after breaking above the psychologically important USD1,900 level, as dealers sought safe havens amid slumping European stocks and in the wake of a gloomy U.S. labor outlook.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,899.55 a troy ounce during early Asian trade, down 0.09%, after hitting a high of USDS1,903.75.
While U.S. markets took the day off for the Labor Day Holiday, European bourses reacted negatively to last week’s release from the U.S. Labor Department showing that non-farm payrolls remained flat in August, and the unemployment rate held steady at 9.1%.
Market expectations were for non-farm payrolls to increase by 74,000 in August. The labor reading was the weakest since September of 2010.
By the end of Monday trading, France’s CAC 40 dropped 4.73% to 2,999.54, Britain’s FTSE 100 slumped 3.58% to 5,102.58, and Germany’s DAX plummeted by 5.28% to 5,246.18.
In Germany, Chancellor Angela Merkel’s Christian Democratic Union was roundly defeated in her home state of Mecklenburg-Vorpommern, setting the stage for a new round of debate on Germany’s role in expanding the powers of the European Financial Stability Facility.
The election result may hinder efforts to grant additional powers to the bailout fund, ahead of a ruling on the legality of the latest bailout for Greece, due to be decided by Germany’s Constitutional Court later this week.
Meanwhile, Swiss investment bank UBS said in a report that, “Additional evidence of U.S. economic weakness raises the likelihood that the Federal Reserve will announce further easing this month.”
UBS added that the implications of last week’s U.S. labor report and intense focus of European sovereign issues give gold “two strong reasons to rally in the coming weeks.”
Elsewhere on the Comex, silver for December delivery added 0.30% to trade at USD43.07 a troy ounce, while copper for December delivery fell 0.08% to trade at USD4.057 a pound.