Gold futures turned lower around mid-morning on a volatile Friday when the U.S. dollar recovered from its earlier weakness as traders reassessed the jobs report.
Also, market participants were said to be selling gold after an initial rise in order to book profits ahead of the weekend.
At 10:41 a.m. EST, lightly traded but nearby January gold is down $4.90 to $1,128.20 U.S. an ounce on the Comex division of the New York Mercantile Exchange, while most-active February is down $4.60 to $1,129.10 U.S.
"It's all dollar-based," said Sterling Smith, Commodity Trading Advisor and market analyst with Country Hedging. "The dollar was down sharply off the unemployment number, which was not inflationary."
December non-farm payrolls fell 85,000 when the consensus forecast had been for a smaller 11,000 decline. Traders tend to buy gold as a hedge against dollar weakness, and vice-versa.
The data enabled February gold to pop from an early low of $1,119.50 an ounce to a high of $1,140 as the euro soared to $1.4417 from $1.4280 U.S. just ahead of the report. The greenback initially weakened on ideas the Federal Reserve would not move ahead any tightening of monetary policy.
"Now the dollar is beginning to pare its losses again and actually turn positive," Smith said.
Win Thin, senior currency strategist with Brown Brothers Harriman & Co., linked the dollar's recovery to market chatter that perhaps the soft jobs report was in part due to cold weather in parts of the U.S. during December.
"The markets are looking at the glass as half full," he said, although he pointed out that economists were aware of this when making their initial forecasts. A reassessment of the data seems to be the main factor now helping the dollar rather than any fresh news, he said, although adding that the euro stalled ahead of chart resistance near $1.4450 U.S., meaning a loss of momentum.
The euro is back down to $1.4327 after an earlier high of $1.4417 U.S.
"The yellow metal had turned back to the negative side as profit-taking and pre-weekend book-squaring came into play," said Jon Nadler, senior analyst with Kitco Metals. In this case, profit-taking is selling to exit positions in which traders previously bought at lower prices.
March silver was still up a nickel to $18.395 but down from its $18.49 U.S. peak.
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