Forexpros – Gold futures rose for the first time in three days on Friday, bouncing off a seven-day low after weaker-than-expected U.S. employment data added to worries over the U.S. economic outlook and as investors grew cautious ahead of weekend elections in France and Greece.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery settled at USD1,642.65 a troy ounce by close of trade on Friday.
Earlier Friday, prices dipped to as low as USD1,626.85, the lowest since April 25, before turning higher following the release of the U.S. labor data. Despite Friday’s 0.5% gain, gold prices still lost 1.37% on the week.
Gold futures were likely to find short-term support at USD1,625.55 a troy ounce, the low from April 25 and resistance at USD1,672.15, the high from May 1.
The Department of Labor said the U.S. economy added 115,000 jobs in April, the smallest increase in six months and far short of expectations for a 170,000 increase, after adding an upwardly revised 154,000 jobs in March.
The unemployment rate ticked lower to 8.1%, the lowest since January 2009. However, the data showed that the decline stemmed entirely from people dropping out of the labor force.
The weak jobs report added to uncertainty over the strength of the U.S. recovery and fuelled speculation the Federal Reserve implement a third round of quantitative easing measures to stimulate growth.
Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing by the Federal Reserve.
Last week, Fed Chairman Ben Bernanke left open the possibility of further asset purchases to support the U.S. economy.
Previous rounds of quantitative easing by the Fed weakened the dollar and sent gold prices soaring to an all-time high above USD1,920 an ounce in September.
The disappointing data prompted investors to shun riskier assets, such as stocks and commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.4% on Friday to end the week at 79.60, the highest since April 23.
Market participants noted that the fact gold rose alongside the U.S. dollar was bullish for the precious metal.
Gold prices also found some fresh safe-haven support ahead of weekend elections in France and Greece, amid fears leadership changes could hinder attempts to resolve the regions debt crisis.
In France, Francois Hollande, the Socialist challenger, is the leading incumbent. He is calling for a re-negotiation of the budget pact with European leaders, saying it needs to place more of an emphasis on growth.
Meanwhile in Greece, neither of the two major political parties, New Democracy and Socialist Pasok is likely to win the majority, adding to uncertainty over the country’s economic recovery.
Investors often buy the precious metal as a refuge against economic and political uncertainty.
Gold futures came under heavy selling pressure earlier in the week, as market sentiment was roiled after a string of weak data from the euro zone and the U.S. reignited fears over the outlook for global economic growth.
Elsewhere on the Comex, silver for July delivery settled at USD30.38 a troy ounce by close of trade on Friday, dropping 3.18% on the week. Silver prices tumbled to a 15-week low of USD29.78 on Friday, before turning higher on the weak jobs report.
Meanwhile, copper for July delivery retreated 3.25% over the week to settle at USD3.719 a pound, the lowest since April 26.
Copper prices lost ground amid fears the global economic recovery is faltering, prompting traders to cut back exposure to growth-linked assets.
Copper is sensitive to the economic growth outlook because of its widespread uses across industries. The industrial metal is regarded as a leading indicator of the global economy.
In the week ahead, investors will be closely watching election results in Greece and France, while in the U.S. a speech by Fed Chairman Ben Bernanke in Chicago on Thursday will be in focus.
In addition, China is to release a flurry of data, including reports on retail sales and inflation that will allow investors to gauge the strength of the world’s second largest economy.
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