Gold futures dropped Friday on a positive jobs report and strengthening greenback confirm solid growth in the world’s largest economy.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at $1,615.75 U.S. a troy ounce during early U.S. trade giving back 0.30%.
It earlier hit a high of $1,632.15 U.S. and a low of $1,612.85 U.S.
Gold futures were likely to find support at $1,612.85 U.S. and technical resistance exists at $1,632.15 U.S.
Strength in the U.S. dollar worked to depress precious metal prices.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gained 0.49% to trade at 81.69.
A stronger U.S. dollar normally lowers gold prices as it depresses the metals appeal as an alternative asset and makes dollar priced commodities more expensive for holders of other currencies.
U.S. Iranian tensions increased, yesterday, when Iran warned the U.S. about sending an aircraft carrier to the Persian Gulf to counter a 10-day naval exercise conducted by Iran’s navy. The U.S. dismissed the warnings saying regularly scheduled movements of Navy ships will continue as usual.
Gold prices seemed to discount yesterday’s news of Italy’s largest bank UniCredit saying it will sell shares to raise $9.8 billion U.S., not to mention the European Central Bank revealed that overnight deposits from financial institutions hit an all-time high.
For much of the last year, investor’s typical reaction to bad news from Europe was to buy gold, as its boosts safe haven appeal of the precious metal, but that relationship has unraveled recently.
Instead, gold futures have moved largely in line with other commodities and risk assets over the past month, with investors preferring the relative safety of the U.S. dollar.
Economic bullish news from the U.S. included a very positive non-farm payrolls report indicating 200,000 new jobs created and a falling unemployment rate to 8.5% failed to ignite an early rally in equities.
Elsewhere on the Comex, silver for March delivery fell 2.11% to trade at $28.67 U.S. a troy ounce, while copper for March delivery moved lower by 0.67% to trade at $3.40 U.S. a pound.
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