Gold Price Steady After Strong Jobs Data

GOLD PRICE NEWS – The gold price traded near unchanged Friday at $1,623 per ounce despite the stronger than expected December jobs report released this morning from the Labor Department.  Gold prices traded in a tight range following the news that nonfarm payrolls rose by 200,000 and the unemployment rate fell to 8.5% – the lowest level since February of 2009.  S&P 500 stock futures climbed 5.40 to 1278.90 while oil and copper prices traded relatively flat at $102.25 per barrel and $3.42 per pound, respectively.

On Thursday, the gold price recovered from an earlier decline to finish higher by $10.55, or 0.7%, at $1,622.63 per ounce.  Strength in the price of gold corresponded with a rebound in the broader financial markets, as many commodities and stocks bounced back from negative territory.  With yesterday’s advance, the spot gold price posted its fifth consecutive day of gains – which had not occurred since last October.  The SPDR Gold Trust (GLD), the world’s most liquid gold price proxy, closed up $1.03 at $157.74 per share.  Silver rose alongside the yellow metal, gaining 0.3% to $29.34 after earlier trading as low as $28.63 per ounce.

Gold stocks rebounded as well, with the Market Vectors Gold Miners ETF (GDX) turning a 1.8% intra-day loss into a 0.3% gain by the end of the day.  For the week, the GDX is now higher by 4.8% and on pace for its best such stretch since late November.  Two of the top performing large-cap gold producers were Agnico-Eagle Mines (AEM) and Gold Fields (GFI), which advanced 1.2% and 0.7%, respectively.  Gold stocks were set to open marginally higher Friday morning.

Yesterday’s move higher in the gold price was particularly noteworthy as several factors were present that have served as headwinds for the yellow metal.  First, the U.S. dollar climbed 1.0% against a basket of foreign currencies and maintained its gains throughout the day.  Additionally, two key data points on the U.S. labor market came in ahead of market expectations.  The ADP employment report for December showed a rise in payrolls of 325,000 – the largest increase since December 2001 and well above the 178,000 consensus estimate among economists.  As for weekly jobless claims, the 372,000 figure was narrowly below the 375,000 level economists were expecting.

The yellow metal’s resiliency was also bolstered by positive commentary from two investment banks.  Citigroup analyst Tom Fitzpatrick wrote in a report to clients that the gold price sell-off in recent months “has run its course and a rally is now back on the cards.”  As long as the price of gold remains above $1,535 per ounce on a weekly basis, Fitzpatrick contended that gold’s long-term uptrend remains intact and it will proceed to reach a new all-time high of $2,400 per ounce later this year.

Jeffrey Wright, a senior research analyst at Global Hunter Securities, offered a more conservative but still constructive gold price outlook for 2012.  Wright forecasted that the price of gold will remain range bound between $1,450 and $1,750 per ounce until a more concrete resolution to the European sovereign debt crisis materializes.  ”I don’t think the bull market is over,” he noted, but “near term consolidation” could ensue for at least six more months.

If the euro crisis is resolved in some fashion later this year, Wright predicted that the markets will shift their focus to the United States’ dire fiscal situation.  This development would put pressure on the U.S. dollar and provide a tailwind for the gold price.  Investors “are going to go ‘what about us?” he asserted.  ”We have no ability to repay this debt and the only way to pay it is to devalue the currency.”  In this scenario, “gold will definitely come back into focus when depreciating the dollar becomes a practical policy.”