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Gold Prices Ease in Friday’s Trading Session

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Gold prices eased in trading on Friday as investors digested a better than expected jobs report for the month of December.

Despite falling on Friday, gold managed to post its biggest weekly gain in five weeks. Gold also broke ranks with the euro this week. Gold rebounded this week after falling into bear territory last week.


Earlier in the day, investors’ sentiment was lifted after data released by the Labor Department showed that the U.S. economy added 200,000 jobs in the month of December. Economists were expecting nonfarm payrolls to rise 150,000 in December. Meanwhile, the unemployment rate also fell unexpectedly to 8.5% in December. Economists were expecting unemployment rate to edge up to 8.7% in December.

Fred Schoenstein, Metals Trader at Heraeus Precious Metals Management, told Reuters that gold came under pressure because people are a bit more comfortable with the recovery of the economy, but it is going to remain rangebound until we get some significant news to push it into either direction.

Spot gold dropped 0.3% to $1,617.19 an ounce on Friday. Spot gold rose 3% for the week, its first weekly gain since early December.

Schoenstein said that gold went up after a lot of year-end liquidation last week. He added that money managers have to put their position back if they want to have it in their portfolio to show it to their clients.

Gold futures for delivery in February dropped $3.30 to settle at $1,616.80 an ounce.

On Friday, the euro slipped to a 16-month low against the dollar. The single currency fell on renewed worries about the sovereign debt crisis in the euro zone. Investors are also worried about the health of European banks.

All eyes are now set on next week’s Italian and Spanish bond auctions. Italy and Spain are two of the struggling euro zone economies. If their bond auctions are successful next week, worries about the crisis should ease a little.

In recent weeks, gold has tracked the euro, with the 25-day correlation log between spot gold and euro hitting a one-year high last week. The precious metal has broken ranks with the single currency week. But some analysts say that this is temporary.

James Steel, HSBC’s chief commodity analyst, said in a research note hat although gold seems to be decoupling from the euro, gold’s inverse correlation with the dollar and the positive correlation with the euro will be re-established.

Gold posted its smallest annual gain in 2011. Analysts expect prices to rise for a 12th straight year in 2012 ad reach a record high. However, they are less optimistic for other precious metals such as silver and platinum, according to a survey conducted by the London Bullion Market Association.

On Friday, silver prices fell sharply. At last check, spot silver was down 1.9% to $28.72 an ounce. Despite Friday’s losses, silver rose nearly 4% for the week, its biggest weekly gain in a month.

Platinum dropped 0.9% to $1,397.40 an ounce, while palladium fell 3.9% to $610.43 an ounce.

The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.37% lower at $157.20, the Market Vectors ETF Trust (NYSE: GDX) ended the day 1.02% lower at $53.35, and the iShares Gold Trust (ETF) (NYSE: IAU) ended the day 0.32% lower at $15.76.

The iShares Silver Trust (ETF) (NYSE: SLV) ended the day 2.07% lower at $27.91, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) ended the day 4.18% lower at $44.65.

The ProShares UltraShort Silver (ETF) (NYSE: ZSL), which takes a short position on silver, ended the day 3.97% higher at $14.67.

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edliston
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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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.

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