Gold Falls After Strong US NFP Data

Gold fell further from an earlier nine-week high on Friday as stronger-than-expected U.S. payrolls data boosted the dollar and stock markets, shoring up a recovery in equities from this week’s rout.

The Labor Department said U.S. job growth surged in December, and revised employment for the prior two months sharply higher, suggesting that a recent manufacturing-led slowdown in economic growth would be temporary.

That lifted stocks, which had been flagging after an earlier recovery ran out of steam, while pushing the dollar up 1 percent versus the euro.

Spot gold touched a low of $1,093.53 in the wake of the data and was down 0.8 percent at $1,100.65 an ounce at 1356 GMT. U.S. gold futures for February delivery were down $7.40 an ounce at $1,100.40.

“(These are) very strong numbers, good for the U.S. dollar,” Georgette Boele, analyst at ABN Amro, said. “The U.S. dollar is the most important negative driver for gold prices, so this will add pressure.”

A strong report could be seen as prompting the Federal Reserve to lift interest rates at a faster pace. Rising rates typically weigh on gold, as they lift the opportunity cost of holding non-yielding assets, while boosting the dollar.

The prospect of rising rates in the United States was a key factor pushing gold down more than 10 percent last year.

via Reuters

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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