Gold Pokes Back Above $1,300 After U.S. Jobs Data; Short Covering Cited

London (Apr 4)  U.S. gold futures poked back above the $1,300-an-ounce mark Friday for the first time in a week as a slightly softer-than-forecast U.S. jobs report prompted ideas the Federal Reserve won’t become any more aggressive in scaling back its accommodative monetary policy.

Some traders were buying to offset, or cover, positions in which they had previously sold.

As of 9:25 a.m. EDT, gold for June delivery was $16, or 1.2%, higher to $1,300.60 per ounce on the Comex division of the New York Mercantile Exchange. The metal had been at $1,293.90 two minutes ahead of the report. It peaked at $1,303.50.

May silver was up 35 cents, or 1.8%, to $20.155 an ounce. It was at $19.99 just ahead of time.

“The jobs number gave it a little bit of a jolt,” said Bob Haberkorn, senior commodities broker with RJO Futures.

The government reported that nonfarm payrolls rose by 192,000 in March. Consensus expectations compiled by news organizations had been for 195,000 to 200,000 new jobs, with some observers looking for even higher.

Meanwhile, the jobless rate held at 6.7% when expectations were for a small dip to 6.6%. The Labor Department reported that more Americans are now looking for work, with the percentage considered to be in the labor rising.

“There seems to be a bit of short covering coming through,” said Afshin Nabavi, head of trading with MKS (Switzerland) SA.

The data likely will keep the Federal Open Market Committee from becoming more aggressive in the near term beyond the $10 billion-per-month of tapering to quantitative easing that policy-makers have been doing at recent meetings, Haberkorn said.

“There won’t be an aggressive scale-back based on a (jobs) number like that,” Haberkorn said.

A key technically, he said, will be whether gold can close above the $1,302 area. If so, that may spur more buying. If not, the market could remain sideways, with support around $1,280, Haberkorn said.

“Catalysts for today's rally in gold include (a) benign jobs report, weaker dollar and (there) continues to be funds realizing they were under-invested,” said George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures.

Source: Kitco