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Comex Gold Extending Gains Since Payrolls; Palladium Leads Precious Complex
By Allen Sykora of Kitco NewsFriday November 7, 2014 11:30 AM
(Kitco News) - Gold prices are extending their gains after getting an earlier boost from the monthly U.S. jobs report, with one analyst adding that some support is also coming from a flare-up in Ukraine-Russia tensions and leaving palladium the strongest precious metal so far Friday.
As of 11:05 a.m. EST, gold for December delivery was $20.10 higher at $1,162.70 an ounce on the Comex division of the New York Mercantile Exchange. It had been at $1,147.20 one minute ahead of the payrolls report early Friday morning.
Gold ticked back above the short-term resistance that some traders had listed around $1,160 an ounce. Prices previously had held just above here three times – on Oct. 31 through Tuesday – before falling. There is a market axiom that failed support turns into resistance, and vice-versa.
Other precious metals also rose and the U.S. dollar was lower against the euro. December silver was up 24.2 cents to $15.655 an ounce. January platinum gained $7.80 to $1,204.90. The biggest percentage gain for the day was in palladium, up $16.55, or 2.2%, to $769.15.
“The general increase in the precious metals comes from the nonfarm payrolls report,” said Howard Wen, analyst with HSBC.
The Labor Department reported U.S. job creation of 214,000 during October, which was below consensus expectations compiled by various news organizations that called for payrolls to rise by somewhere around 235,000 to 243,000. A lower figure tends to cool ideas that the eventual tightening of U.S. monetary policy might move ahead, and the 10-year Treasury yield is down to 2.316% from 2.375% late Thursday.
Still, portions of the jobs report also showed strength. Employment gains for the two previous months were revised upward by a combined 31,000. Also, the unemployment rate edged down by another tenth of a percentage point to 5.8%. Hourly wages are still not upticking much, though, rising just 0.1% in October to $24.57.
“It seemed to be a mixed bag for bullion,” Wen said. “But nonetheless, the headline miss supported prices.”
Bernard Dahdah, precious-metals analyst with Natixis, also cited the lower-than-forecast October jobs figure as a factor helping gold.
“But tensions between Russia and Ukraine have flared up again,” Dahdah said. “This has definitely pushed palladium prices higher and could have possibly affected gold to a lesser extent.”
Ukraine accused Russia of sending a column of tanks and troops into the eastern portion of the country, escalating the several-month-long crisis. Russia is the world’s largest producer of palladium. In the past, this metal has benefitted from Ukraine-Russia tensions on worries palladium supplies could be interrupted by factors such as potential Western sanctions.
Wen said palladium also has been helped by expectations that the metal’s industrial demand will pick up. The largest share of palladium consumption is auto catalysts.
George Gero, precious-metals strategist with RBC Capital Markets, said some buying in gold was because of short covering. This is when traders buy to cover or exit short positions in which they had previously placed bearish bets.
By Allen Sykora of Kitco News; asykora@kitco.com
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