Gold Futures Fall as Robust Jobs Data Shifts Investor Sentiment

Strategic Insights -

Investors shifted their preference from the refuge of gold to equities and industrial commodities after robust jobs data showed U.S. employers added 297,000 private sector jobs in December, exceeding analysts' forecast of 100,000 jobs. The data caused the dollar to strengthen, further pressuring dollar-denominated gold by making it more expensive for buyers using other currencies. As a result, gold futures fell by 0.4% to settle at $1,373.70 a troy ounce on the Comex division of the New York Mercantile Exchange.

Key Takeaways:

  • Gold futures fell by $5.10, or 0.4%, to settle at $1,373.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
  • The jobs data showed U.S. employers added 297,000 private sector jobs in December, exceeding analysts' forecast of 100,000 jobs.
  • The dollar strengthened by 0.9% after the jobs data was released, further pressuring dollar-denominated gold.
  • Investors shifted their preference from gold to equities and industrial commodities, such as oil and copper, which are used more widely than gold in manufacturing, construction, and transportation.
  • Several forecasters raised their projections for nonfarm payrolls after the jobs data was released, with the new median forecast being 150,000 jobs instead of 140,000 reported Monday.
  • Michael Gross, broker and futures analyst with OptionSellers.com, said that gold could be a bit of a laggard if commodities are truly back into a bull market, as it gets a lot of its strength from fear and uncertainty.
  • Ira Epstein, director of the Ira Epstein division of the Linn Group, said that too much good happening in job growth is weighing on gold, as people move out of safe-haven money and into stocks where they see some growth potential.

Statistics:

  • Gold futures fell by $5.10, or 0.4%, to settle at $1,373.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
  • The dollar strengthened by 0.9% after the jobs data was released.
  • 297,000 private sector jobs were added in December, exceeding analysts' forecast of 100,000 jobs.
  • The new median forecast for nonfarm payrolls is 150,000 jobs instead of 140,000 reported Monday.

Sources:

  • Dow Jones Commodities News via Comtex
  • OptionSellers.com
  • Linn Group
  • Federal Reserve meeting minutes released this week
  • Dow Jones Newswires (Matt Whittaker, 212-416-2139, matt.whittaker@dowjones.com)