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Gold drops as traders weigh slow growth vs strong employment

Published 10/08/2012, 03:41 PM
Updated 10/08/2012, 03:42 PM
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Investing.com - Gold prices slipped lower Monday as investors continued to favor dollar positions in the wake of strong employment and slow growth warnings from the Federal Reserve.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.17% at USD1,777.75 a troy ounce in late afternoon U.S. trade

Gold futures were likely to test support at USD1,774.95 a troy ounce, Friday's low, and resistance at USD1,798.05, Friday's high.

Gold and the dollar historically trade inversely from one another, and the greenback rose early Monday as investors viewed the September jobs report with a degree of skepticism and avoided risk.

The U.S. unemployment rate fell to 7.8% percent in September from 8.1% in August, the Bureau of Labor Statistics reported Friday.

Employers added a net 114,000 jobs in September, while households reported that total employment rose by 873,000 in September following three months of little change.

The number of unemployed Americans stood at 12.1 million in September, the fewest since January 2009. 

A surge in demand for part-time workers sent the headline unemployment rating falling, possibly due to political campaigns hiring younger Americans for work ahead of November's elections.

Meanwhile, the creation of just 114,000 new nonfarm payrolls reflected no major improvement from previous monthly jobs reports.

Gold prices have risen in recent sessions thanks to Federal Reserve stimulus tools that weaken the dollar, though investors viewed the September jobs report as a reason to sell for profits early Monday.

The U.S. Federal Reserve is currently running a third round of quantitative easing, a monetary stimulus tool that sees the U.S. central bank buy USD40 billion in mortgage-backed securities a month on an open-ended basis to spur recovery.

Elsewhere on the Comex, silver for December delivery was down 1.42% and trading at USD34.080 a troy ounce, while copper for December delivery was down 1.28% and trading at USD3.730 a pound.







 

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