Gold Rises Toward $1,140/oz. After U.S. Jobs Data
Source: Business Report (1/8/10)
"Non-farm payrolls numbers come in weaker than expected."
Spot gold hit a high of $1,139.40 an ounce in the wake of the data and was bid at $1 135.60 an ounce at 16:13 SA time, against $1,131.40 late in New York on Thursday. Earlier it slipped as low as $1,119.45.
"People were largely going short into the market, and as the non-farm payrolls for December were slightly worse than expected, those shorts were covered," said Michael Widmer, an analyst at Bank of America Merrill Lynch.
"The dollar came off quite a lot on the back of it, and that contributed to pushing gold higher," he added.
U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange rose $3.30 to $1,373.00 an ounce.
The dollar plunged against the euro after data showed U.S. job losses were 85,000 last month, while markets were expecting no cuts.
Gold prices have benefited from low interest rates in the last year, which contributed to dollar weakness and cut the opportunity cost of holding non-interest bearing assets.
"The play for gold (this year) is speculating on the move in U.S. interest rates," said Jeremy East, Standard Chartered's global head of commodity derivatives trading. "(The payrolls data) will obviously have an impact on expectations for that."