Gold gains after jobs report and end of Indian jeweler strike

In the Lead: “Inside Jobs”

As has been the case for quite some time now, arguments pro and con the bullish case continue to be manifest in the gold market. Such pronouncements generally swell in numbers immediately following a major decline-such as the one we witnessed last week, to three-month lows. Tomorrow’s NZHerald is featuring some of the most recent statements by gold market watchers. One observer, Cetin Ciner, Professor of Finance at UNC in Wilmington, said that although “It’s difficult to forecast, I think the gold bull market is over.”  Wells Capital Management’s Jim Paulsen noted that “Fear has been gold's best friend, and so to the extent that fear is dissipating, gold should fall.

Prof. Ciner also remarked that, as regards gold decline last week, “the price of gold dropped on Wednesday despite news that Spain had to offer unexpectedly high interest rates to attract investors to buy new government bonds. That suggested that the European debt troubles are far from over, normally a trigger for buying gold, not selling it. It's pretty obvious that gold's character has completely changed. If it was a real safe-haven asset, you would have expected investors to flock to gold."

In the background, the US dollar was actually 0.20% higher on the trade-weighted index this morning, where it was quoted at 80.01 at last check. United-ICAP analyst Walter Zimmerman said that “last week’s gains in the U.S. dollar could indicate a shift toward risk aversion, which would be negative for stock and commodity markets.” Mr. Zimmerman also said that “some commodity prices were already pointing to the weaker outlook; copper appeared poised for a sharp break lower, while crude oil was also flashing indications that its seasonal rally was beginning to weaken.  Meanwhile, said Mr. Zimmerman, “the U.S. dollar looks just fine. Everything else looks like it is about to deflate. This is the nightmare of central banks everywhere.”  

Crude oil fell fairly hard, losing nearly 2% to reach $101.50 per barrel. Evidently, for traders of black gold, the weak rate of March US job creation implies that they have some reservations about the pace of the recovery in the US economy. US stock index futures were reflecting a similar hint of pessimism among investors this morning and they were indicative of a broadly lower Dow to come today. Platinum and palladium showed the best gains of the morning with a 1.2% rise in the former (to $1,611.00) and a 0.80% climb in the latter (to $646.00). Rhodium remained bid at $1,350 per troy ounce after having lost $50 late last week.

Let us for a moment parse/dissect/look deep inside the US Labor Department’s so-called “disappointing” US jobs data. While it is true that analysts’ expectations for the figure were clearly north of the pivotal 200,000 level and that the report showed ‘only’ 120,000 jobs as having been created in the US in March, consider the chart below for a bit of perspective:

Labor chart

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