Gold Prices Edge Higher; Silver Prices also Gain
Gold futures logged mild gains on Friday despite of better than expected nonfarm payrolls data, leading several analysts to say that the metal has bottomed out. Silver prices also edged higher on Friday.
At last check, U.S. gold futures for April delivery were trading 0.2% higher at $1,578 an ounce, while spot gold was trading flat at $1,577 an ounce.
Earlier on Friday, a data provided by the Labor Department showed that the U.S. economy added 236,000 new jobs in February, which was well above analysts’ consensus estimate for 160,000 new job additions. The unemployment rate also fell to 7.7% from 7.9% in the preceding month.
Although the better than expected improvement in the job market is bearish for gold as the Federal Reserve’s ongoing $85 billion monthly bond purchase program is pegged to the improvement in the U.S. labor market, no more panic selling following the news reflects that the metal has found strong support at $1,560 an ounce.
Brien Lundin, who is editor of Gold Newsletter, said in a note to clients that initially the market interpreted the job data as bearish for gold resulting in some sell-off. [However], “the downturn failed to gain momentum, and this indicates that the selling has been exhausted.”
“This could turn out to be a very important turning point for gold, and could trigger the sharp short-covering rally that I’ve been expecting,” said Lundin.
Echoing Lundin’s sentiment, Ole Hansen, an analyst at Saxo Bank said that despite Labor Department non- farm payrolls data was strongest in a while, the fact that it failed to trigger any further selling, is indicative of market’s confidence in the metal.
Holdings in SPDR Gold Trust (ETF) (NYSE: GLD) continued to fall this week though. A data provided by Thomson Reuters showed that holdings of SPDR Gold Trust, which is world’s largest gold backed ETF, dropped to 1.805 tons to hit more than 16-month low of 1,243.05 tons as of Thursday, March 7. Holdings remained unchanged on Wednesday but before that SPDR reported declines for 11 straight sessions.
Silver prices were last trading at $29.05 an ounce, up 0.6%.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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