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Gold falls after
U.S. jobs report

4/12/09.Gold fell more than 3 per cent to below $1,170 an ounce Friday, as
the dollar rallied after U.S. data showed far fewer job losses than expected
last month.

Gold was on track for its biggest one-day percentage loss since February,
but remained up 33 per cent year to date.

Dealers said bullion was due for a correction after investment funds and
individual investors piled into the metal amid concern about currency
values and potential inflation.

“We've had a big move in a short period of time and it was clearly
overbought. It was susceptible to a pullback. I don't think this is a
surprise,” said Caesar Bryan, who manages $650-million mutual fund
assets at New York-based GAMCO Gold Fund.

Spot gold fell as low as $1,167.65. It was at $1,173.90 an ounce at 12:43 p.
m. EST, down from $1,207.10 late in New York Thursday.

U.S. gold futures for February delivery on the COMEX division of the New
York Mercantile Exchange fell more than $40 to $1,175 an ounce.

Gold accelerated losses after the Labor Department reported that U.S.
employers cut 11,000 jobs in November, the smallest number of job losses
since the start of the recession in December 2007.

That report, which suggested the job market could begin to recover soon,
sent the dollar rallying against the euro and yen.

“Gold has been hit quite badly after the dollar strengthened on the non-
farm payrolls data ... counter to what you would normally expect,” said
Dan Smith, analyst at Standard Chartered.

Spot prices struck a record high at $1,226.10 an ounce on Thursday amid
expectations for persistent weakness in the dollar and rising inflation in

“The euro has fallen back below $1.50 ... it has undercut the need for the
currency hedgers to purchase gold,” said James Steel, metals analyst at
HSBC in New York.

U.S. February gold futures broke below 14-day support level at $1,171.40
an ounce. A drop below that could see prices testing the Nov. 30 support
at $1,165, and the next level will be the intraday low at $1,135.80 on Nov. 27.

Some economists are suggesting the U.S. Federal Reserve may be able to
tighten monetary policy sooner than expected based on positive
economic data.

“The data point to a transition in the economy from a deep recession to a
modest recovery,” said William Sullivan, chief economist, JVB Financial
Group in Florida.

“This will encourage the Fed to be more vocal about an exit strategy from
their highly accommodative posture.”

Elsewhere, metals consultancy GFMS said China will overtake India as the
world's largest gold consumer in 2009, with total demand forecast at 432
tonnes. Indian demand has been pressured this year by rising prices.

Among other precious metals, silver (SI-FT18.52-0.61-3.18%) was at $18.53
an ounce against $18.80 late on Thursday in New York.