watch the us interest rate

Gold Watch: A pause in interest rate hikes?
By Jon Nones
04 Aug 2006 at 02:52 PM

Gold for October delivery added $3.50 to stand at $654 an ounce on the New York Mercantile Exchange.

Metals remained broadly higher as traders took their cue from weakness in the U.S. dollar tied to a slowdown in U.S. employment growth, according to MarketWatch.

"The perception of the cooling economy reinforced the position of those market participants who believe that next week's Fed meeting will be just that - a meeting without a resulting change in interest rates," said Kitco.com analyst Jon Nadler.

However, Nadler said there remains "ample evidence that inflation is ... alive and well." Indeed, the Labor Department's payrolls report showed average hourly earnings are up 3.8% in the 12 month through July.

"The combination of these opposing forces signals stagflation - a scenario feared by many, especially in an election year," Nadler said in a note to clients.

Investors appeared to be betting that the data could stop the U.S. Federal Reserve from raising interest rates next week at its August meeting, according to Reuters.

"There is a lesser chance of the Fed tightening with today's employment numbers," said George Gero, vice president at RBC Capital Markets Global Futures. "This is good for gold."

"The outlook for gold in this changeable currency environment as a hedge against inflation also looks more positive than it has been for 10 or 15 years," Anglo Chief Executive Tony Trahar said on a conference call.

Silver gained by 34 cents to $12.43 an ounce. Copper also moved higher, adding 13.25 cents to stand at $3.622 a pound. Platinum tacked on $10.50 to $1,257 an ounce, while sister metal palladium added $2.35 to $327 an ounce.