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Forbes: Gold Reverses Gains On Better-Than-Expected Jobs Number

March 10, 2014
10 gram fine gold bars

Source: Forbes

U.S. stocks are on the rise Friday morning, following the news that the U.S. added 175,000 jobs in February, 25,000 more than economists had predicted. But with the Dow, Nasdaq and S&P 500 heading upwards on the news, gold is losing the ground it gained earlier in the week on investor fears over the crisis in Ukraine.

Gold futures fell a little under 1% immediately following the release of the better-than expected economic data and continued moving downward as the morning wore on; futures of the precious metal are currently trading around $1,333 an ounce for a loss of $18, or 1.37%. Gold spot prices are down 1.2%, or $16.43, to about $1,334 an ounce, while futures of silver, copper and platinum are also all trading in the red: silver is down 3.33%, copper is down 3.93% and platinum is trading for an 0.82% decline.

The bullion-backed ETF SPDR Gold Shares, whose movements closely match that of gold itself, was also down 1.2% in Friday morning trading, while gold producer IAMGOLD was trading for a 1.9% loss  as Barrick Gold, the world’s largest gold mining company, was down 2.4%. 

The declines make sense, as the relatively rosy economic news gave investors less of a reason to need a safe haven asset like gold and lifted the S&P to a new intraday high; the index is currently trading at 1,882.69  points, or a 5.66-point  uptick. The Dow is up 59.73 points, or 0.36%, while the Nasdaq is up 6.37 points, or 0.15%.

Gold hit a four-month high on Monday as the crisis in Ukraine coupled with a Russian rate hike sent stocks around the world for a tumble. But investor concerns spawned by tensions over Ukraine’s Crimean peninsula have since subsided, and some market insiders say that going forward, gold will be more affected by what happens at home than what’s going on abroad.

“Longer term, investors are more worried about the economic data rather than geopolitical exposure in Ukraine,” Scott Carter, CEO of Lear Capital, said in a recent phone interview, adding that geopolitical issues are a typical catalyst for a pop in gold prices, but as the crisis abates, you see investors start to pull back. “The spike in price may not hold forever unless crisis does damage to other aspects of the country,” Carter said.

Despite gold’s downturn Friday, the metal is still above $1,300 an ounce, a level Carter says is a critical threshold because it has stayed at or above that price for more than two weeks and is prompting some analysts to give gold year-end price targets as bullish as $1,450 an ounce. Other analysts aren’t as convinced and maintain a more bearish view — see: Credit Suisse’s $1,000-an-ounce prediction – but Carter sides with the bulls.

“The economy is not nearly as strong as the Fed and the media would lead us to believe,” he said. “That creates fear in the market.”

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