Fool's Gold Report: Jobs Send Gold Over $1,300, but Will the Gains Last?

Gold investors had looked forward to Friday's jobs reports all week, and they weren't disappointed by the lackluster data from the Bureau of Labor Statistics this morning. Nonfarm payroll gains of 192,000 fell below expectations, and an unchanged unemployment rate of 6.7% helped lead to solid gains in precious metals, pushing SPDR Gold Shares up 1.3%. Silver, platinum, and palladium also gained, but mining companies were muted in their reaction.

How metals moved today
June gold futures jumped almost $19 per ounce Friday, to $1,303.50, which marked a bigger percentage gain than SPDR Gold Shares managed. Silver's gain was less dramatic, with gains of $0.14 per ounce in the May futures contract still leaving the price below the key $20 mark, at $19.946.

Source: Kitco. As of market close.

Image sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

On the jobs front, this morning's report fell just short of expectations. Economists had hoped to see as many as 200,000 new jobs, and they'd especially expected a drop in the unemployment rate to 6.6%. But an extensive rise in the size of the labor force in March helped keep unemployment steady even with the rise in payrolls, and that had some gold investors looking for further potential moves from the Federal Reserve to try to stimulate the U.S. economy. Gains for SPDR Gold Shares climbed into the late-morning hours, and the bullion ETF held onto those gains throughout the day.

Yet, most people still believe that the Fed won't do anything to change its downward trend on its bond-buying activity under quantitative easing absent a much larger disruption to the broader economy. With signs that the winter pause was just a seasonable aberration, the Fed will likely remain on course to eliminate new bond buying by the end of 2014. If an increase in interest rates results, then it would likely be negative for SPDR Gold Shares and for gold prices in the spot and futures markets.

Looking at platinum
Meanwhile, beyond gold, many precious-metals investors still prefer the prospects for platinum-group metals. Analysts at HSBC didn't change their projections for a rise in platinum next year to $1,850, and for palladium to hit $900, but they cited the ongoing strike against South African platinum-group metals miners, as well as strong auto demand for catalytic converters, and jewelry buying from China. With projections of supply deficits in the market expanding, platinum could climb even further.

That was only part of the good news for platinum-group specialist Stillwater Mining , which gained almost 2% today. Stillwater Mining also got a favorable recommendation from analysts at BB&T, which initiated coverage with a buy rating and an $18 price target, which is about 15% above its current price. In the past, Stillwater Mining got criticized for diversifying beyond platinum and palladium by buying gold and copper producer Peregrine Metals in a 2011 deal, as its timing proved to be unfortunate. Still, with solid exposure to platinum-group metals, Stillwater remains one of the only ways to get stock exposure to the industry.

Next week, the key for gold will be whether it can hold its gains from this week. Without further positive news, gold might not be able to hang onto the $1,300 level very long.