Gold Drops Ahead of US Jobs Data

November 2, 2012 at 08:04

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Gold edged lower on Friday, with investors waiting for a key U.S. employment report later in the day to provide further clues on the health of the world’s top economy.

All eyes are on the U.S. nonfarm payrolls data, which is expected to show a pickup in jobs growth, although the unemployment rate may still tick up from a near four-year low in September.

This follows data on Thursday showing increasing private employment, a drop in jobless claims, a sharp improvement in consumer confidence as well as mixed signals from the manufacturing sector.

“If the nonfarm payrolls data is very good, it will be bearish for gold as it will cut expectations for any additional quantitative easing and it will be fairly positive for the dollar as well,” said Nick Trevethan, senior commodity strategist at ANZ in Singapore.

Chart analysis suggested that gold could test this year’s low — $1,527 hit in mid-May — in the next three months, but the price needs to pierce through strong support above $1,600, he added.

The dollar was poised to rise for a second day against a basket of currencies, putting pressure on commodities priced in the greenback as they become more expensive for buyers holding other currencies.

In industry news, the world’s top gold producer, Barrick Gold Corp, reported a sharp drop in third-quarter profit, nudged back the production date for its massive Pascua-Lama gold and silver mine and increased its estimate on costs.

Newmont Mining Corp, the world’s second-largest gold producer, reported a drop of 26 percent in quarterly profit as production at its giant Indonesian copper and gold mine plummeted and costs rose.