US Jobs Data Caps Gold’s Rise in a Subdued Market
Gold struggled to maintain the positive tone of the year to date, as news that US unemployment hit its lowest rate for two years pushed equities higher and precious metals lower on Friday. Payrolls numbers helped the unemployment rate fall to 8.3%, and the Dow Jones rise 157 points on the last trading day of the week as gold retreated to $1725.52, having risen to over $1765 earlier in the week.
US Fed Chairman, Ben Bernanke, had earlier lent support to the yellow metal, as he said there were still risks to the economy in the US, indicating that the greatest of these threats come from the European situation. His comments were seen as leaning toward concentrating on employment at the expense of higher inflation, and he did not rule out further quantitative easing.
Greece has said that the ECB must be willing to take a loss on its Greek debt holdings for the country to achieve its austerity and debt reduction goals. Greece has still to come to agreement with private creditors in order to receive bailout funds next month.
Earlier in the week, markets had been subdued as gains through the year to date were consolidated. US figures showed consumer spending stagnating, though savings increased and the market absorbed Fitch’s downgrading of European sovereign credit ratings last Friday. Company results in the United States were mixed, lending support to the view that its economy has not yet fully turned the corner into sustainable growth, and investors continue to see gold as a safe haven against further economic weakness and inflationary pressures.
Resistance for gold is seen at around $1765, with support returning at $1720.
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