Gold Backs Away From 13-month High on Stronger Job Market

Last week’s U.S. payroll data sent spot gold prices bouncing up and down Friday, ending the day flat at $1,258.71 down 0.02 percent. The session saw prices seesawing, reaching a 13-month high twice on technical and underlying investment demand and then dropping sharply by the end of the trading day.

The precious metal hit its highest in 13 months and did so again later at $1,279.60 an ounce. Gold has been driven up 19 percent this year by economic concerns, sparking volatility in equities and oil prices and boosting gold's appeal as a safe haven. It fell 1.1 percent to $1,249.90 after the payroll data was released before reversing course slightly. Gold futures for April delivery settled up 1 percent at $1,270.70 an ounce and last traded at $1,260, up 0.14 percent.

According to James Steel, chief metals analyst for HSBC Securities in New York, "It started out with strong gains overnight, based on continued dollar weakness, but as we got closer to the jobs release, the market cautiously pared back."

Job Market Strengthening

Data released by the U.S. Labor Department showed that employment had gained ground in February, a clear sign that the job market had strengthened and that fears of the economy heading into recession were easing, limiting the chance for the Fed to raise interest rates.

Analysts are now focusing on the Fed's upcoming meeting in a few weeks' time, and how they will deal with the revised growth forecast.

"The data was all about the future Fed move and the data released has confirmed that the Fed are not off beat with their strategy," Ava Trade's chief market analyst Naeem Aslam said.

Meanwhile, holdings of SPDR Gold Shares, the world's largest gold-backed exchange-traded fund, rose nearly 5 tons on Thursday and BlackRock's iShares Gold Trust said it had suspended the issuing of shares in its physically backed gold exchange traded product in response to a historic surge in buying.

Cina Coren
Cina Coren is a former Wall Street broker and financial advisor. She holds a Master's degree in Communications and spent many years writing for international news outlets and journalistic publications. Today, Cina spends most of her time writing internet articles and blogs, and reading various newspapers to stay on top of the news.