Gold Prices Pare Losses as Stocks Come Off Highs

NEW YORK ( TheStreet) -- Gold prices were paring losses on Friday after the major U.S. equity markets pulled back from their highs on the robust February jobs report.

The Bureau of Labor Statistics said Friday that nonfarm payrolls for February climbed to 236,000 from the prior month's downwardly revised 119,000. Consensus among economists had been expecting payrolls to add 160,000 jobs. Additionally, the unemployment rate -- an indicator the Federal Reserve is monitoring as it pertains to a policy of low interest rates -- shifted down to 7.7% from a previous read of 7.9%.

Gold for April delivery was coming off session lows following the favorable jobs report as prices were decreasing just $1.10 to $1,574 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,583.10 and dipped as low as $1,560.40 -- a bottom the yellow metal hit shortly after the employment statistics printed.

The spot price was losing 90 cents, according to Kitco's gold index.

"It was when the number came out that we saw this negative reaction," said Ole Hansen, head of commodities strategy at Saxo Bank in Copenhagen. "At the same time we've had a continued rally in stock markets, which is obviously burying relief, I think, among many observers who are still looking for an elusive correction, which just doesn't materialize."

Hansen said the rally in equities has encouraged investors to move their money out of safe-haven assets like gold and into the more advantageous return on stocks.

After the initial selloff, the yellow metal displayed some resilience as it climbed back to the flatline and inched slightly above it. This corresponded with a pullback in the major U.S. equity markets.

"Once we saw equities start to digest the jobs number a little bit more, that's when we started to see equities come off their highs and when the bottom was put in on the metals," said Phil Streible, senior commodities broker at RJO Futures. "I think that people are really not buying that number as much -- 236,000 -- and they're really thinking that there will be big revisions down when we come up with this next nonfarm payroll."

The labor report showed that nonfarm payrolls in January were revised down to 119,000 from the original estimate of 157,000, but the second revision for December's payrolls rose to 219,000, up from the prior estimate of 196,000.

Silver prices for May delivery was increasing 17 cents to $28.98 an ounce, while the U.S. dollar index was surging 0.78% to $82.75.

"Silver has been doing reasonably well, but obviously every time we see a sharp move to the downside silver tends to see most of the damage," said Hansen. "We've seen another bounce in the dollar . . . and showing some new recent highs against the yen, and pretty strong against the euro, also against the British pound, it's trading fairly strong."

Gold investors were anticipating Friday's jobs report as a significant boost -- as happened -- could signal an earlier end to the Fed's policy of low interest rates and quantitative easing. Highly accommodative policy has made gold an attractive asset since the financial crisis as traders have seen the yellow metal as a hedge against inflation.

"I think this is an unusual environment where you have moderate growth with low inflation," said Robert Tipp, chief investment strategist at Prudential Fixed Income.

Gold mining stocks were mixed on Friday. Shares of Randgold Resources ( GOLD) were shedding 1%, while shares of AngloGold Ashanti ( AU) were climbing 2.3%.

Among volume leaders, Barrick Gold ( ABX) was off 0.07%.

Gold ETF SPDR Gold Trust ( GLD) was down incrementally at $152.56, while iShares Gold Trust ( IAU) was slipping 1 cent to $15.33.

-- Written by Joe Deaux in New York.

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