Gold Remains Range-Bound Despite Soft Payrolls; Moves Inversely To Stocks
New York (Feb 7) U.S. gold futures spurted higher but only briefly, remaining range-bound overall so far on Friday after a report showing that growth in U.S. nonfarm payrolls was weaker than expected in January.
The metal was held back when the Standard & Poor’s 500 stock index futures quickly flipped to positive territory from negative, and as traders likely concluded the data were not bad enough to stop the Federal Open Market Committee from curtailing the bond-buying program known as quantitative easing, traders said.
As of 9:05 a.m. EST, gold for April delivery was $2.70 higher to $1,259.90 per ounce on the Comex division of the New York Mercantile Exchange. The contract was at $1,261.90 two minutes ahead of the jobs report.
March silver was down 8.3 cents to $19.845 an ounce. The contract was at $19.915 just ahead of time.
Meanwhile, the March S&P 500 futures were up 10.80 points to 1,777.40. The euro rose to $1.35893 from $1.35859 late Thursday.
“It’s still in a range despite the fact that the (jobs) numbers were pretty bad,” said Afshin Nabavi, head of trading with MKS (Switzerland) SA.
Gold quickly moved to a session high of $1,272 after the report. However, the metal stalled there, at least for now. The market could gain more technical momentum if it breaks above the $1,275 area, Nabavi said.
“It looks like people are happy to buy on the dips and sell on the rallies,” Nabavi said.
Sean Lusk, director of commercial hedging with Walsh Trading, said gold initially got a bid when the S&P futures were on the defensive. However, he continued, S&P futures quickly reversed course and ticked higher.
“Conversely, gold and silver sold off from their highs as the stock market rose,” Lusk said.
He later added, “I think the market sentiment now is it (the jobs data) is not enough for the Fed to curtail further tapering of the (QE) program.”
From here, Lusk said, gold may well take its cue from equities. When stocks have sold off lately, traders moved into gold as a safe-haven play, and vice-versa.
(Source: Kitco news)
