Gold at session highs after strong jobs numbers

January 9, 2015

New York (Jan 9)  Gold prices climbed on Friday after a closely watched U.S. jobs report came in stronger than expected.

The U.S. economy created 252,000 jobs in December, while the unemployment rate dropped to 5.6 percent. Economists had seen job growth at 240,000, with a jobless rate of 5.7 percent.

Read More › Job creation pushes higher, rate falls again

Spot gold rose to a session high of $1,214.90 an ounce in the wake of the report.

"The perception of an imminent increase in interest rates in the United States, but also the UK, is waning, and that element is supporting gold," ActivTrades senior analyst Carlo Alberto de Casa said.

"Technically, the closest resistance level stands in the $1,238/1,240 area, but it doesn't look like that is going to be challenged, especially as investors await today's U.S. jobs data."

Spot prices were heading for a 2 percent weekly gain, snapping a three-week losing streak, mostly as global equities slumped at the start of the week on worries over political developments in Greece that could see it leaving the euro zone.

Equities have since recovered, prompting gold to give up some of its gains. Strong U.S. economic data has also hurt.

A jobs report on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week and job cuts declined sharply in December.

The dollar edged down 0.2 percent against a basket of leading currencies, but remained within reach of its 2005 peak of 92.630.

Despite recent improvements in the job market, the Federal Reserve's latest policy meeting released on Wednesday indicated that the central bank will be patient in raising rates as inflation is expected to be subdued.

In addition to that, Boston Fed President Eric Rosengren, speaking on Thursday, highlighted the Fed's cautious stance, saying the Fed can likely be patient not only on the timing of the first interest rate hike but on the series of subsequent increases.

Gold, which has no yield, tends to suffer in a rising interest rate environment.

Elsewhere, in the physical markets, demand from China has been strong in recent weeks in the build-up to the Lunar New Year holiday in February, when gold is bought for gift-giving.

Premiums on the Shanghai Gold Exchange were hovering between $5 and $6 on Friday over the global benchmark, indicating strong buying interest.


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