Gold Prices Reclaim $1,700 after U.S. Jobs Report

GOLD PRICE NEWS – The gold price recovered from an earlier sell-off on Friday as financial markets began to digest the impact of the latest U.S. jobs data.  The spot price of gold initially dropped to an intra-day low of $1,684.37 per ounce, but soon after rebounded into positive territory by $8.27, or 0.5%, at $1,706.84 per ounce.  The world’s most liquid gold price proxy, the SPDR Gold Trust (GLD), advanced by 0.4% to $165.22 per share.

Silver mirrored the trajectory of the gold price this morning, as it retreated to $32.68 following the release of the November non-farm payrolls report, but subsequently climbed by $0.31, or 0.9%, to as high as $33.34 per ounce.  The iShares Silver Trust (SLV), the world’s largest silver ETF, rose by $0.27, or 0.8%, to $32.20 per share.

As for gold stocks, the sector rallied alongside the price of gold.  The Market Vectors Gold Miners ETF (GDX) jumped by $0.65, or 1.4%, to an intra-day high of $46.20 per share.  The Market Vectors Junior Gold Miners ETF (GDXJ) – comprised of many small- and mid-cap gold and silver companies – moved up by $0.28, or 1.3%, to $21.06 per share.  The gold stocks sector also outperformed the broader equity markets, as the S&P 500 Index quickly gave back its initial 0.5% gain to trade near unchanged at 1,412.66.

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Among widely-traded GDX components, a few of the largest advancers on Friday were Goldcorp (GG), Harmony Gold (HMY), and Yamana Gold (AUY).  Shares of GG rose by 1.2% to $37.25, HMY by 2.7% to $7.78, and AUY by 1.2% to $17.94.

Gold prices at first declined after the U.S. non-farm payrolls report for November showed additions of 146,000, well above the 85,000 consensus estimate among economists.  Another positive aspect of the data was that the closely-followed unemployment rate fell from 7.9% to 7.7%, in-line with expectations.  The Bureau of Labor Statistics (BLS) also noted that Hurricane Sandy “did not substantively impact the national employment and unemployment estimates for November.”

On the negative side, however, the October report was revised downward from 171,000 to 138,000.  Furthermore, the U-6 rate – which includes individuals who have given up search for work – remained at a significantly higher rate of 14.4%.

Adding to the economic disappointment was the University of Michigan Consumer Sentiment Index report for December, which came in at 74.5.  Not only did the Index decline from 82.7 in November, it was also well below the 82.0 level economists were expecting.

Commenting on today’s rebound in the price of gold, VTB Capital analyst Andrey Kryuchenkov stated that “We’re retracing the losses from earlier. There was an opportunity to move on the lows…1,715 is strategic resistance going into next week. If we don’t close below $1,690, support will remain at $1,690.”