Gold News

Gold Price Recovers Half of Week's Losses Ahead of Key US Jobs Data

Gold Prices clung onto a four-day high in very thin trade early Friday, erasing half of the week's 6% losses ahead of key US employment data.

Non-Farm Payrolls for March – due at 08:30 New York time (12:30 GMT) – were slated by Wall Street analysts to show 50,000 job losses from a month earlier. Researchers at penciled in a 70,000 fall.

But the Gold Price looked vulnerable to a better-than-expected jobs report after the ADP Employment Report – often a good indicator of the official non-farm jobs data – said on Tuesday that private US payrolls added 8,000 jobs last month.

The ADP report had been forecast to show a 45,000 job loss. Gold Prices sank to a two-month low of $875 per ounce on Tuesday's surprise.

"Following the surprise 8,000 unit increase in employment reported on Tuesday," says today's Gold Market note from Standard Bank, "US initial jobless claims rose by 38,000 [in Thursday's data release] to 407,000, 11.2% higher than expected.

"However, the dollar continued to firm [and] the yield on 10-year US treasury securities increased marginally from 3.56% to 3.598%."

Ten-year US Treasury yields gave back that bounce early Friday, while short-dated T-bonds fell in price after Ben Bernanke "promised the market that maybe the second half will be somewhat better," according to one European analyst, commenting on the Fed chairman's appearance before the Joint US Economic Committee yesterday.

"The market priced out some of the rate cuts that were there a few weeks ago," the researcher told Bloomberg today.

Over in Asia, stock markets fell for the first time in three days while US crude oil gained 90¢ to $104.73 per barrel.

Base metals were mixed, and soft commodities rose across the board, as Tokyo Gold Prices for Feb. '09 delivery ticked above ¥3,000 per gram, recovering Monday's opening level as the week ended.

Gold priced in Yen still stands 10% below the 25-year peak of early March, however.

"US non-farm payrolls data are important for the Gold Market, especially after yesterday's [worse than expected] jobless numbers," reckons Simon Weeks, head of precious metals dealing at Bank of Nova Scotia.

"Gold still has room for more correction, but may stabilize if the Dollar remains weak."

The British Pound briefly touched a one-week high to the Dollar above $2.00 this morning, capping the Gold Price in Sterling at £453 per ounce in London.

For French and German investors looking to Buy Gold today, the price ticked 0.5% lower from the overnight high to trade at €576.50 per ounce.

The European single currency meantime move to $1.5720, recovering pretty much all of the week's early plunge on news that German factory orders in Feb. – while lower from Jan. – rose 9% from the same month in 2007.

This week's new 16-year high in Eurozone inflation looks like to keep interest rates on hold at the European Central Bank.

The likelihood of the US Federal Reserve following up its 300-basis-point to Dollar interest rates since Sept. with a further 50-point cut at the end of this month fell sharply this week, according to the futures market.

Betting on US interest-rate futures now puts the odds of a 0.5% cut at just one-in-five, down from above two-in-five on Monday. The Fed's current lending rate of 2.25% is sharply below the latest rate of consumer price inflation, reported at 4.3% in Feb.

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Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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