Author: Sri Jegarajah
Gold will likely continue to profit from a flight to safety in the aftermath of a surprisingly weak December U.S. jobs report, with the metal set to extend gains from a one-month high as equities lose ground, CNBC's latest survey of bullion market sentiment shows.
Friday's U.S. jobs report for December – which showed the creation of just 74,000 new jobs, well short of the 200,000 that analysts had expected – blindsided many in the financial markets. Gold caught a bid on fears that the economy may not be on as sound a footing as previously thought, potentially forcing the Federal Reserve to re-think the pace of its stimulus wind-back.
The payroll numbers were a "huge miss and will give pause to all of this talk about tapering," said Scott Carter, CEO of Lear Capital. Additionally, labor participation rates are at their lowest level in more than three decades, which will give Fed Chief Janet Yellen "all the ammo she needs to keep the printing presses going in 2014."
Gold "will perform well in this environment," Carter said, finding strong support around the pre-payrolls level of $1,230. ...