Gold Up on Bernanke Comments, Jobs
Source: Dow Jones, Tatyana Shumsky (1/7/11)
"We may see more disappointing data, offering an upside push to gold."
The most actively traded contract, for February delivery, was recently up 0.4%, or $5.30, at $1,377.00/oz. on the Comex.
The thinly traded January delivery contract was up 0.4%, or $5.80, at $1,377.20/oz.
Gold futures have floundered in recent days as a brighter economic outlook bolstered risk tolerance. The stream of upbeat economic data had some traders worrying the Fed may cut short its stimulus program and raise interest rates in the medium term.
Bernanke eased these concerns Friday, telling the U.S. Senate Budget Committee the bank's loose monetary policy will remain in place and that the current pace of growth was too slow to significantly boost the labor market.
"At this rate of improvement, it could take four to five years for the job market to normalize fully," Bernanke said. His comments came on the heels of the Labor Department's monthly non-farm payrolls report, which showed the economy adding 103,000 jobs in December. Economists forecast an increase of 150,000.
Meanwhile, unemployment fell to 9.4% last month from 9.8% in November—the lowest level since May 2009 and the biggest decline in more than a decade.
Gold prices tumbled about $20 ahead of the jobs data as traders braced for a blockbuster improvement, which failed to materialize. "People are writing off the unemployment rate because a lot of that is seasonal retail hiring, which is only temporary," said MF Global Analyst Tom Pawlicki.
"We may see more disappointing data as we go further, and that's offering an upside push to gold," Pawlicki said.