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Gold Prices More Affordable In Wake of Stronger U.S. Employment Data

The price of gold registered only nominal changes following a dip to a new two-week low in Friday morning U.S. Trading. A stronger-than-expected rise in U.S. jobs growth and a decline in the unemployment rate in February spurred the move in gold. The U.S. jobs report has taken on a new importance to the gold market following the announcement by Ben Bernanke in September that quantitative easing would be tied to the health of the labor market. Thus far, the Federal Reserve has not altered its bond-buying program though modest gains in the labor market prompted members of the policy making committee, the FOMC, to voice leanings for a desire to pullback on easing, minutes from the meeting in December 2012 show.

Prices have rebounded in the gold market, but the released of the U.S. economic data brought prices down to technical support at the February low, which was not breached.

By late trading on Friday, U.S. gold futures for April delivery gained $2.90 or 0.18 percent to $1,578.00 per troy ounce. The spot price of gold lost a nominal $1.01 or 0.03 percent to $1,578.49 per troy ounce.

The U.S. unemployment rate dropped to 7.7 percent as non-farm payrolls gained with a much stronger than had been expected 236,000 in the month of February. Non-farm jobs had been forecast to rise by around 150,000. The release of stronger than expected figures again prompts the question in the minds of investors as to how long the Federal Reserve will continue its stimulus efforts at the current pace.

Analysis from Forbes shows any pullback on easing would at least initially be a bearish development for raw commodity markets, which include the precious metals. Stimulus has been an important support of the precious metals markets through recent rallies, however the necessity of easing to increase inherent value in the precious metals may come more into question in the near future.

Bears retain an overall near-term technical advantage, according to Forbes, though prices in the market are no longer close to falling below the very important near-term technical support at the February low of $1,554.30 per troy ounce. A breach of that would have and could signal a fresh move downward in the near term. A rebound in the market to levels prior to the release of the U.S. jobs data indicates the price of gold is still range bound at the current time and data stronger than the jobs report is necessary to influence the market.

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