Orlando, Florida 01/02/2013 - Gold futures climbed about $10 after the release of US non-farm payroll data that came in mostly in line with expectations, while the country's unemployment rate ticked slightly higher.
Gold for April delivery on the Comex division of the New York Mercantile Exchange was last up $11.16 at $1,673.60 per ounce. The yellow metal hit a session high of $1,675.90 minutes after the jobs report was disseminated.
The US Department of Labor said that non-farm payrolls rose a seasonally adjusted 157,000 in January, down from 196,000 in the preceding month, whose figure was revised up from 155,000. The January number came in slightly below the forecast 161,000.
The unemployment rate ticked higher to 7.9 percent from 7.8 percent.
“People can't get way from the fact that the unemployment rate isn't migrating too far away from 8 percent. That's something [gold] traders are focusing on this morning,” a US-based gold trader said. “Gold will find support until that rate starts nudging down in a substantive way."
Gold prices often rises after the unemployment rate moves higher because the US Federal Reserve has linked interest rates to economic targets. The national non-farm unemployment rate will have to drop to 6.5 percent before the Fed moves rates up from the current exceptionally low level of 0-0.25 percent.
During the decade-long bull run, one of gold’s biggest allies has been historically low central bank interest rates.
In wider markets, the euro climbed to 1.3675 against the dollar, a 14-month high, while Germany's DAX and France's CAC-40 were up 0.44 percent and 1.28 percent respectively.
As for the more industrial commodities, light sweet crude (WTI) oil futures for March delivery on the Nymex were down nine cents at $97.40 per barrel and the most actively traded Comex copper contract was at $3.7395 per pound, up 0.75 cents.
Elsewhere, the January Chinese manufacturing PMI - released earlier this morning - disappointed at 50.4, below the bullish forecast of 51.1 and a slight drop from 50.6 in December.
“Next month if the PMI falls below 50 perhaps we’ll wail and gnash our teeth as others are doing with the 0.2 decline month-on-month in this number, but until then we’ll simply say that China’s economy is moving 'from the lower left to the upper right', albeit modestly,” Dennis Gartman, editor of the Gartman Letter said.
Additionally, the comparative HSBC number at 52.3 reading improved on the earlier 51.9 flash reading for January, blunting the impact of the other PMI reading.
"The market seems to be siding with the HSBC number," FastMarkets analyst William Adams said.
In Europe, January manufacturing PMIs have also been released, with Spain and Italy surprising to the upside: Spain at 46.1 and Italy at 47.9. Italian unemployment also ticked lower to 11.1 percent.
In gold-specific data, the gold price in India has declined about six percent from the November peak owing mostly to rupee's appreciation against the US dollar. Additionally, the government raised the import tariffs on gold to six percent from four percent and doubled the gold dore bars and ores duties to five percent last week, Sharps Pixley noted.
“The import duty rise has dampened gold demand while the dealers in India have already stocked up for the wedding season,” it added.
In the other precious metals, Comex silver for March delivery was last up 53.4 cents at $31.885 per ounce.
Platinum futures for April delivery on the Nymex were up $16.60 at $1,691.50 per ounce and the March palladium contract was at $746.10, up 40 cents.
“Mining producers in South Africa could find themselves facing more trouble, for state energy provider Eskom is planning to increase electricity prices by an average of 16 percent per year from April 1 in the next five years,” Commerzbank AG said in a note.
“The South African Chamber of Mines in particular is protesting strongly against this planned price hike, which would hit energy-intensive platinum and gold mining production especially hard,” it added.
(Editing by Mark Shaw)