Gold Prices Fall on Strong Jobs Report

Source: The Street, Alix Steel (4/1/11)

"Investors ditch the safe haven metal for stocks and trade in their gold for cash after the metal's 1.3% rally in the first quarter."

Profit- taking was hitting gold prices Friday as investors opted for stocks after a strong reading on U.S. jobs in March.

Gold for June delivery was losing $14.90 to $1,425 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,437.80 and as low as $1,413.50 while the spot gold price was losing $7.90, according to Kitco's gold index.

Both metals finished the first quarter with a bang, but were getting hit after a positive jobs report. Gold settled at a record $1,439.90 an ounce, but still has to take out the $1,450 level for prices to push higher. Silver prices closed at a 31-year record of $37.88 an ounce after surging 22% in the first quarter.

The Bureau of Labor Statistics said in its Employment Situation Report that nonfarm payrolls rose by 216,000 in March. That was well ahead of expectations. Economists were expecting the headline number to increase by 185,000 according to consensus estimates from Briefing.com.

Companies added 230,000 jobs, helping to offset the decline in state and local government payrolls. Economists forecast private payrolls to increase by 203,000, according to Briefing.com. The ADP said in its estimate that companies added 201,000 jobs in March.

The unemployment rate unexpectedly ticked down to 8.8%. The unemployment rate has dropped for four straight months, with the household survey showing a more rapid increase in employment than the establishment survey.

In addition to investors ditching the safe haven for stocks, investors might also be trading in gold for cash after the metal's 1.3% rally in the first quarter.

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