Gold rebounds above $1,300 after jobs miss

By Myra P. Saefong | MarketWatch – 1 hour 38 minutes ago

Cited from Yahoo! Finance  http://finance.yahoo.com/news/gold-rebounds-above-1-300-163057707.html

SAN FRANCISCO (MarketWatch) — Gold futures turned a steep loss into a small gain Friday after July payrolls growth came in short of expectations, leading analysts to say plans for the Federal Reserve to taper its bond buying could be pushed further out.

Gold for December delivery (XCEC:GCZ3) tacked on $1.60, or 0.1%, to $1,312.80 an ounce on the Comex division of the New York Mercantile Exchange after falling by more than $25 before the jobs data. Even so, it was set for its first loss in four weeks, trading about 0.7% lower than a week ago. Gold futures on Thursday slipped 0.1%.

Silver turned higher along with gold. The September contract (XCEC:SIU3) was up 33 cents, or 1.7%, to $19.95 an ounce, trading around 1% higher for the week.

Gold had earlier fallen below $1,300 as a week’s worth of mostly upbeat data had some economists expecting July jobs growth of 180,000 and upwards. However, the data showed 162,000 jobs were created, though the unemployment rate dropped to a more than five-year low of 7.4% And that data underpinned gold.

“I believe gold will remain supported as long as the market believes tapering is off the table,” said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange, in emailed comments. He added that any “misconceptions that the Fed was looking to taper in September have been blown out of the water” by the jobs data.

Borthwick said lately gold’s price against the dollar has been “strongly correlated with Fed statements regarding quantitative easing. As discussion moves towards tapering, we see the price of gold declining, and as economic numbers move to the downside gold is supported,” he said.

Weakness in the U.S. dollar (IFUS:DX-Y.NYB)  Friday also offered support for dollar-denominated gold.

Brightening economic data raise expectations that the Fed will slow the pace of its monetary stimulus. Low rates and large-scale bond purchases have been considered a drag on the dollar’s value but a boon for gold prices in recent years. There was a clutch of upbeat data this week that had many economists expecting a strong jobs number and further reasons to scale back the Fed’s bond buys.

After its policy meeting earlier this week, the Fed slightly downgraded its economic view and didn’t offer any signals as to when it would start tapering asset purchases, currently set at $85 billion a month.

Gold also gained Friday as U.S. equities traded broadly lower. But metals mining stocks bucked the equities trend to trade up 1%. Shares of Barrick Gold Corp. (ABX) were up 2.2%, ready for their first gain in five sessions. The company on Thursday reported a hefty loss for the second quarter on impairment charges.

Among exchange-traded funds, the SPDR Gold Trust (GLD)  climbed 0.4%. More than six metric tons of gold was sold from the SPDR gold ETF between July 31 and Aug. 1, data show.

But analysts at Barclays, in a note Friday, said that in the coming weeks, the “main risks to the downside [for gold] stem from loss-making investment holdings,” notably exchange-traded products “amid a seasonally slow period for physical demand.”
Rounding out action on Comex, September copper (XCEC:HGU3) rose 3 cents, or 1%, to $3.20 a pound. It was poised for a weekly gain of roughtly 3%.

October platinum (XNYM:PLV3) fell 50 cents to $1,443.30 an ounce, trading up about 1.5% on the week, while September palladium (XNYM:PAU3) lost $2.85, or 0.4%, to $729 an ounce, set to tack on 0.7% for the week.