The dollar dropped and gold rose sharply at the New York open this morning, reversing overnight trends. The U.S. economy added 155,000 jobs, while the unemployment rate stayed near last month’s level, clocking in at 7.8%. These numbers may simultaneously point to an improving economy and more people re-entering the job hunt, inducing the Fed to continue quantitative easing.
Afshin Nabavi, head of trading at MKS Finance describes this morning’s physical gold demand as “extraordinarily strong” Early this morning he predicted that “If we can get our head above the $1,645-ish area, we may see some further short covering.” Gold hit a four and a half month low overnight in London before recovering to over $1,650 an ounce on the COMEX.
Jim Wykoff at Kitco gives his forecast for near-term gold: “It’s my bias that the precious metals have seen a knee-jerk reaction and have over-reacted to the FOMC minutes. When looking at the matter from a demand perspective, the world’s largest economy growing at a faster pace augurs for increasing consumer demand for commodities. Also, better U.S. economic strength will help the other major world economies boost their own growth. It would not surprise me to see this latest big dip in gold and silver prices to become a bargain-hunting buying opportunity.”