Gold Surges as December Jobs Report Flops
Gold for February delivery at the COMEX division of the New York Mercantile Exchange was jumping $10.30 to $1,239.70 an ounce. The gold price traded as high as $1,245 and as low as $1,226.60 an ounce, while the spot price was increasing $13.53, or 1.1%.
Despite the immediate surge from intraday lows around $1,227 an ounce, analysts remained skeptical of gold's upside potential.
"Short covering was featured in gold and silver futures markets," Jim Wyckoff, senior analyst at Kitco.com, wrote in a note on Friday. "The gold bulls have to be at least a bit disappointed their market could not rally more in the face of such a weak employment report. Such underscores the still-very-weak technical posture of gold and silver markets."
The Labor Department said Friday that the U.S. economy added 74,000 jobs, while the unemployment rate dropped to 6.7% from a prior reading of 7%. Economists surveyed by Thomson Reuters were expecting 196,000 jobs and for the rate to remain unchanged.
A weaker jobs report often fuels a rise in gold prices as investors purchase the commodity as a hedge against central bank economic stimulus. With the Federal Reserve's policy-making tied closely to the health of the U.S. labor market, Friday's report suggests the Fed may choose to slow its pullback in stimulus.
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