Gold shares turned sharply lower Friday as jobs report digested

Gold shares turned sharply lower Friday following the November non-farm payrolls report, with the AMEX Gold Bugs Index (HUI) sliding 2.5% to 570.02 in afternoon trading.

Notable decliners included Eldorado Gold (EGO), Goldcorp (GG), and Kinross Gold (KGC). EGO fell by 3.4% to $17.57 per share, GG by 2.6% to $52.11 per share, and KGC by 1.0% to $13.83 per share.

Weakness in gold stocks came despite an advance in gold futures, although the yellow metal pared its gains considerably as trading progressed. COMEX gold for February 2012 delivery spiked to as high as $1,767.10 per ounce following release of the jobs data, but was up by just $9.30, or 0.5%, at $1,749.10 per ounce this afternoon.

Gold shares were also pressured by a rebound in the U.S. dollar, which rose 0.4% against a basket of foreign currencies.

The broader U.S. equity markets also pared their gains as trading progressed.  The Dow Jones Industrial Average (DJIA) initially climbed as much as 126.65 points, or 1.0%, to 12,146.68, but was higher by just 47.71 points, or 0.4%, at 12,067.74 later in the day.

Although non-farm payrolls slightly missed expectations – at 120,000 versus the 125,000 consensus estimate among economists – the unemployment rate dropped to 8.6%, below the 9.0% expected by economists.

Commenting on the jobs data, Deutsche Bank chief U.S. economist Joe LaVorgna – who earlier this year predicted that the U.S. economy would avoid a new recession – stated that “I don’t think you’re supposed to come away too negative on this report. It’s another piece of evidence, that suggests the economy, to this point, has weathered various shocks, not the least of which is Europe, and that it accelerated in the second half of the year.” – GoldAlert.com

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Posted by admin on Dec 3 2011. Filed under Gold stocks. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry