Investors are searching for safe havens according to Alan Thein, co-manager of Legal & General's multi-manager fund range, commenting on US indicators.
He said: “Friday saw the release of a much weaker than expected US employment report for May. Non-farm payrolls increased by only 69,000, a figure that was considerably below the consensus forecast calling for a 150,000 gain.
“In addition, April's previous initial gain of 115,000 was reduced to a gain of only 77,000. Clearly employment growth has weakened anew and Fed Chairman Ben Bernanke's testimony yesterday on "Economic Outlook and Policy" before the Joint Economic Committee of the US Senate got that bit more exciting - his words even more closely scrutinised for any hint that further monetary easing is likely to be forthcoming.
“The initial market reaction, as evidenced by market movements on Friday, was heavily to the downside - risk assets were shunned and safe havens sought.
“Interestingly, and in contrast to the liquidation of most financial assets, Gold sparkled, rising by a stunning c4% on the day, the market seemingly rediscovering the yellow metal's value in a sea of uncertainty and a world where further policy easing looks only ever more likely (e.g. further central banks' balance sheet expansion and paper currency debasement).
“However, even Gold's stellar showing was outdone by the even more jaw-dropping upwards move witnessed in Gold equities, which rose by c7% on the day.”