Crude and gold rallied recently as the commodity sector recovered from its recent losses. This came as traders reacted positively to a disappointing set of data on the US jobs market. The reason for the positive reaction was that the downbeat data meant there would be no change to the America’s ultra-low interest rates which is, in fact, up beat.
The Labor Department said that 103,000 jobs were created last month in its non-farm payrolls report for December. This came in against expectations of 175,000. The fact that fewer new jobs were created than expected means that the Fed is likely to keep interest rates near zero.
The poor employment data also suggested that the Federal Reserve would continue with QE2, which fuelled much of 2010’s late rally in the commodity markets.
The price of gold has seen falls recently as disappointing job data failed to revive demand for the safe-haven due to a raft of strong economic data. The yellow metal notched its biggest weekly decline since May 2010.
The decline, of nearly 4%, in the price of the commodity has called into question bullion’s lengthy bull run. Investors will be looking forward to a US economic recovery, which Fed Chairman Ben Bernanke said “may be taking hold”. Continued debt problems in the Eurozone have limited falls however.
Looking at the technical charts, according to City Index, “At the moment, the commodity has dropped lower supported by a Parabolic break, as well as breaching the $1400 support level.
“If prices continue to fall then $1330-$1298 will next key support levels. Overall a larger degree consolidation pattern looks like it could be developing, which suggest sideways price action in the weeks to come”.
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