Gold Overcomes Dollar's Gains

Upward revisions to jobs boost the greenback but the yellow metal pushes ahead.
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Updated from 11:37 a.m. EDT

Gold edged ahead Friday despite gains in the greenback after a weaker-than-expected October jobs report also included upward revisions to employment for August and September.

The Labor Department said payrolls grew only 92,000 during October, lower than the consensus forecast of 125,000. At the same time, however, September figures were revised up almost threefold to 148,000 from 51,000. In addition, October's unemployment rate fell to 4.4%. Expectations were for 4.6%, in line with the prior period.

Hourly earnings figures for the same month, also from the Labor Department, jumped 0.4%. That compared with forecasts of 0.3% and a September figure of 0.2%. Taken together with Thursday's zero-productivity-growth news, the increase in pay raises concerns over burgeoning inflation, as firms will likely feel the need to pass on increased wage costs in the form of higher prices or suffer lower profit margins.

Foreign-exchange traders took an overall positive spin on the data and marked up prices for the dollar.

"Market sentiment has swung a bit away from a hard landing towards a soft landing," says Marc Chandler, a currency strategist at Brown Brothers Harriman and a

RealMoney.com

contributor. "It's a step in the right direction."

The U.S. dollar was recently buying 118.025 yen, up from 117.11 late Thursday. It was also gaining on the euro, which was trading at $1.2718 compared with $1.2777 previously.

Gold prices frequently tend to pull back on dollar strength, and during the first part of the session that's exactly what happened with December contracts dipping to a low of $619.50 an ounce. In the end, however, the ambiguity of the economic data boosted the appeal of the yellow metal, and the price recovered to close up $1.40 at $629.20 an ounce on the Comex division of the Nymex. The gold exchange-traded funds were rising also:

iShares Comex Gold Trust

(IAU) - Get Report

and

streetTracks Gold Shares

(GLD) - Get Report

were both higher by about 0.6% in recent trading.

"Investors have been buying gold as a hedge against a possible fall in the major indices or the U.S. dollar," says Jeff Christian, managing director at CPM, a New York-based specialty consulting firm. "Gold responds

well

to uncertainty," and the mixed economic data only boost that factor.

Elsewhere, there are still signs that augur more subdued economic activity. The Weekly Leading Index dipped 0.3% last week, marking its 14th straight decline, according to the Economic Cycle Research Institute. In the prior period, the indicator fell 0.1%.

Among the miners, RBC Capital Markets trimmed its price target on

Barrick Gold

(ABX)

to $43 a share from $47 and reiterated a sector-perform rating. The stock was rallying 0.1% recently.

Also trading up were shares of

Meridian Gold

(MDG)

, gaining 2.3% recently. Shares of

Randgold Resources

(GOLD) - Get Report

were, however, losing, off about 1.5% lately.

In base metals, Comex December copper contracts closed up 3.10 cents at $3.3225 a pound.

Shares of U.S. copper miner

Phelps Dodge

(PD) - Get Report

were gaining 2% in recent action, buoyed by the robust metal price.