Gold Prices Surge on Weak Jobs Data

NEW YORK ( TheStreet) -- Gold prices surged Friday morning after weak jobs data pushed investors into the yellow metal as a safe haven.

Gold for December delivery was jumping $23.50 to $1,729.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,731.30 and as low as $1,691.30 an ounce, while the spot price was gaining $29.70, according to Kitco's gold index.

"Bad jobs news is good news for gold as stimulus is apparently the possible outcome next week, with bonds moving up in price with the Euro hitting higher levels it turns out the funds were right," George Gero, precious metals strategist at RBC Wealth Management, wrote in a Friday morning note.

Silver prices for December delivery were rising 65 cents to $33.32, while the U.S. dollar index was falling 0.91 to $80.39.

The Labor Department said Friday the U.S. work force added 96,000 jobs in August, below the 125,000 that economists expected.

Gold had already raced above the $1,700 psychological threshold last week when Federal Reserve Chairman Ben Bernanke said at the Jackson Hole, Wyo., central bank summit that he would strongly consider new monetary stimulus, and gained more momentum after the European Central Bank began to release details on Thursday of its bond-buying program.

The under-performing jobs number gave investors even more reason to expect a quantitative easing announcement at the next Fed meeting as Bernanke has stated that the health of the labor market would be the central bank's main priority.

A stronger-than-expected ADP payroll report from Thursday suggested that nonfarm payrolls would offer a little upside surprise, but a downtick in manufacturing jobs and a shrinking of those actively seeking work revealed the ugly possibility of a limping economy.

President Barack Obama delivered his convention speech Thursday night and pleaded for the American people to stick with him for another term to see through his path to economic recovery.

"I'm asking you to rally around a set of goals for your country -- goals in manufacturing, energy, education, national security, and the deficit; a real, achievable plan that will lead to new jobs," Obama said.

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