At CNBC: Gold may rise to $1,280 in post-payrolls bounce
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Gold may rise to $1,280 in post-payrolls bounce
by Sri Jegarajah
Gold will likely continue to profit from a flight to safety in the aftermath of a surprisingly weak December U.S. jobs report, with the metal set to extend gains from a one-month high as equities lose ground, CNBC’s latest survey of bullion market sentiment shows.
Friday’s U.S. jobs report for December – which showed the creation of just 74,000 new jobs, well short of the 200,000 that analysts had expected – blindsided many in the financial markets. Gold caught a bid on fears that the economy may not be on as sound a footing as previously thought, potentially forcing the Federal Reserve to re-think the pace of its stimulus wind-back.
The payroll numbers were a “huge miss and will give pause to all of this talk about tapering,” said Scott Carter, CEO of Lear Capital.Additionally, labor participation rates are at their lowest level in more than three decades,which will give Fed Chief Janet Yellen “all the ammo she needs to keep the printing presses going in 2014.”
Gold “will perform well in this environment,” Carter said, finding strong support around the pre-payrolls level of $1,230.
However, some gold bulls appeared guarded about their projections for higher prices. “Gold prices could rise modestly,” said Edmund Moy, former director of the U.S. Mint. “A weak labor market and dwindling gold supply due to miners reducing capacity support a bullish outlook this week.”
Moy stressed that the future course of the Fed’s taper depends on whether weather-related distortions continue to color subsequent jobs data. “We will start to hear talk from the Fed about how they’ve not committed to tapering and will wait to see how the data plays out,” he said.
Gold bulls said that the metal may test $1,280 in the near-term after posting its third consecutive daily rise on Monday, hitting a one-month high at $1,254.50 an ounce, and gaining 4 percent year-to-date.
Read the full article at CNBC.com.
Tags: Gold
Categorised in: News