PRECIOUS-Gold rebounds on U.S. payrolls but posts weekly loss

Fri Aug 2, 2013 3:18pm EDT

* Bullion rallies $30 or 2 pct from earlier two-week low
    * Likely faces strong resistance from 50-day average
    * U.S. nonfarm payrolls growth slows but jobless rates down
    * Coming up: US ISM non-manufacturing index Monday

 (Updates prices, market details and comment, 2nd byline,
dateline)
    By Frank Tang and Clara Denina 
    NEW YORK/LONDON, Aug 2 (Reuters) - Gold rose on Friday
following a sharp rebound from earlier lows, after mixed signals
from the U.S. nonfarm payrolls report suggested that the Federal
Reserve could be more cautious about drawing down its economic
stimulus program. 
    Bullion still posted a near 2 percent loss for its biggest
weekly drop in five weeks, weighed down by a dollar rally.
    Gold initially fell to a two-week low at $1,280 an ounce as
encouraging U.S. gross domestic product and factory activity
data earlier in the week reduced the metal's appeal as an
investment hedge.
    It jumped about $30 or 2 percent from its session low after
government data showed U.S. employers slowed their pace of
hiring in July but the jobless rate fell anyway, easing fears
that the U.S. central bank might imminently reduce its $85
billion monthly bond buyback stimulus. 
    The jobs data sparked a sharp decline in U.S. Treasury bond
yields, seen as measures of short-term interest rates. 
    "Gold seems to be more sensitive to signs of tapering than
any other assets. Certainly, the direction of interest rate is a
very crucial thing for gold at this point," said Bill O'Neill,
partner of commodities investment firm LOGIC Advisors. 
    Spot gold was up 0.l percent at $1,309.80 an ounce by
2:31 p.m. EDT (1831 GMT), having earlier traded as low as
$1,282.89.
    Bullion posted a 1.8 percent weekly decline for its first
weekly drop in four weeks.
    U.S. gold futures for December delivery settled down
70 cents at $1,310.50 an ounce, with trading volume about 10
percent below its 30-day average, preliminary Reuters data
showed.
    Gold staged a strong recovery as the dollar slumped against
the euro and the yen, and benchmark U.S. Treasury yields
 fell back below 2.7 percent. 
    Until Friday, the metal had ended lower in the last four
days. Earlier in the week, the Fed offered no indication that it
was preparing to reduce its monetary stimulus at its next policy
meeting in September. 
    
    CHART RESISTANCE, ETF HOLDINGS DOWN 
    On chart, gold is likely to running into strong technical
resistance at $1,320 an ounce near its 50-day average, analysts
said.
    Mark Arbeter, chief technical strategist at S&P Capital IQ,
said that there could be a small pullback before a rally to over
$1,450 an ounce, citing favourable futures positioning by
speculators and overly bearish sentiment. 
    As a gauge of investor interest, holdings in SPDR Gold Trust
, the world's largest gold-backed exchange-traded fund,
fell 0.7 percent to 921.05 tonnes on Thursday, hitting fresh
four-year lows. 
    Outflows from the top eight gold ETFs tracked by Reuters
have totalled 19 million ounces so far this year, or about $25
billion at current prices.
    Among other precious metals, silver rose 1.4 percent
to $19.86 an ounce. Platinum was up 0.4 percent at
$1,441.99 an ounce and palladium eased 0.5 percent to
$727.72 an ounce. 
 2:31 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1310.50  -0.70  -0.1  1282.40 1318.00  178,790
 US Silver SEP  19.912  0.288   1.5   19.185  20.265   54,546
 US Plat OCT   1451.50   7.70   0.5  1415.80 1455.90   10,553
 US Pall SEP    729.70  -2.15  -0.3   721.15  736.00    2,819
                                                               
 Gold          1309.80   1.96   0.1  1282.89 1317.90         
 Silver         19.860  0.280   1.4   19.250  20.270
 Platinum      1441.99   5.49   0.4  1419.00 1450.25
 Palladium      727.72  -3.78  -0.5   725.27  732.97
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        193,020   218,053   187,132     25.48    1.39
 US Silver       58,266    54,596    55,303     30.67   -0.67
 US Platinum     10,702    13,261    12,489     23.37    0.00
 US Palladium     3,060     4,131     5,353                  
                                                               
   

 (Additional reporting by A. Ananthalakshmi in Singapore;
Editing by David Evans and Grant McCool)
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Comments (1)
Whilst the gold price may have bounced after NFP numbers today, the gold buying market is becoming imbalanced in its restrictive focus on the US and the Fed.

There are lots of other parts of the world that influence the price of gold, with emerging markets accounting for 70% of demand for gold bullion. Jan Skoyles and the World Gold Council have been arguing this for a while and the need for gold investors to have a more holistic view. http://therealasset.co.uk/gold-price-below-1300/

Aug 02, 2013 2:12pm EDT  --  Report as abuse
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