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Gold drops on robust U.S. jobs report

Published 03/07/2014, 02:14 PM
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Investing.com - Gold prices fell on Friday after data revealed the U.S. economy picked up more jobs than expected in February, which investors expect will prompt the Federal Reserve to continue dismantling monetary stimulus tools that have bolstered gold prices since 2012.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at $1,338.80 a troy ounce during U.S. trading, down 0.96%, up from a session low of $1,329.00 and off a high of $1,353.10.

The April contract settled up 0.86% at $1,351.80 on Thursday.

Futures were likely to find support at $1,320.10 a troy ounce, the low from Feb. 28, and resistance at $1,355.00, Monday's high.

The Bureau of Labor Statistics reported earlier that the U.S. economy added 175,000 jobs in February, beating expectations for a 149,000 increase.

January's figure was revised up to 129,000 from 113,000.

The U.S. private sector added 162,000 jobs last month, exceeding expectations for a 154,000 rise. January's figure was revised up to 145,000 from 142,000.

The report also showed that the U.S. unemployment rate ticked up to 6.7% in February, from 6.6% the previous month. Analysts had expected the unemployment rate to remain unchanged last month.

Meanwhile, data also showed that the U.S. trade deficit expanded to $39.1 billion in January, from $38.98 billion in December, whose figure was revised from a previously estimated deficit of $38.7 billion.

Analysts had expected the trade deficit to expand to $39.00 billion in January.

The data sent the dollar gaining, as the Federal Reserve has said it will pay close attention to data when deciding on how quickly it will dismantle its monthly bond-buying program.

Fed bond purchases, currently set at $65 billion a month, weaken the dollar by suppressing interest rates that aim to spur recovery by encouraging investing and hiring, which makes gold an attractive hedge as long as such policies remain in place.

Still, dollar didn't soar and gold didn't plummet as the market has already priced in expectations for the Fed to continue winding down stimulus measures as the year unfolds.

Meanwhile, silver for May delivery was down 3.20% at US$20.883 a troy ounce, while copper futures for May delivery were down 4.27% at US$3.081 a pound.

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