Gold Drops Post NFP But Recovers Quickly

Gold prices sold off and hit a five-month low in the wake of a modestly stronger-than-expected U.S. employment report. However, bargain hunting and short covering quickly surfaced on the dip and prices bounced well up from their daily lows to trade above unchanged. February gold was last up $6.50 at $1,239.00 an ounce. Spot gold was last quoted up $13.40 at $1239.00. March Comex silver last traded up $0.13 at $19.70 an ounce.

The U.S. economy added 203,000 non-farm jobs in November, which is higher than the 180,000 rise expected by the market place. The unemployment rate fell 0.3%, to 7.0%, which is the lowest level since November of 2008. The U.S. dollar index and the U.S. stock indexes rallied on yet another upbeat piece of economic data.

Gold prices quickly recovered from their daily lows in the wake of the bearish jobs data. This suggests the bears may be getting exhausted after their recent success in pushing prices lower. It also suggests the tapering of U.S. monetary policy sooner rather than later is already factored into the market place. This week’s U.S. data economic data has been mostly upbeat and has fallen into the camp that reckons the Fed will act to “taper” its monthly bond-buying program policy sooner rather than later.

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza