Unemployees Of The Month

By Jon Nadler
Jan 8 2010 10:11AM

Gold prices tried to find support at lower levels overnight, following yesterday’s declines that were largely a combination of dollar strength and on-going profit-taking. Asian markets witnessed further declines in the yellow metal, which sank to a low near $1118 as mild selling spilled over into the overnight hours and as few bargain hunters stocked up on it ahead of critical US data that was released this morning. The dollar continued to mark time, hovering near 78 on the trade-weighted index, while crude oil remained fairly steady near the $82.50 mark as wintry weather continues to keep portions of the US in a deep freeze.

While all eyes were on the US jobs figures on this second Friday of 2010, similar data from the Old World contained a rather unpleasant percentage: ten. The number of unemployed Europeans reached an 11-year high in November, meaning that nearly 23 million folks were jobless in the broader 27-nation EU region. Some countries – Ireland, for one – recorded jobless rates nearing 13%, but the unfortunate prize this morning went to Spain – a country in which unemployment levels are now nearing the astounding 20% mark.

US jobs data did not manage to surprise to the upside this morning, and contradicted a fairly large number of economists who had expected a turn in the employment situation. The economy lost 85,000 jobs in December albeit November’s numbers were revised to show a small degree of job creation. The unemployment rate remained at 10% in the US. The US dollar declined towards the 77.75 level in the wake of the labour statistics, and gold regained its footing, going from an earlier negative $6 to a near $6 gain on the day. The market sees such statistics as giving the Fed little reason to hike rates, just yet. Therefore, the carry trade is seen as able to…carry on (for at least the next month or two). In any case, the post-jobs spike in gold turned out to be rather brief and by 10 am –despite continuing dollar weakness- the yellow metal had turned back to the negative side as profit-taking and pre-weekend book-squaring came into play.

However, not everyone sees today’s jobs numbers-induced losses in the greenback as the catalyst for a return to the era of virtually non-stop losses that was the defining characteristic of at least a good portion of 2009. In fact, Citigroup, as quoted in a Bloomberg piece posted before the government’s figures were released at 9:30 this morning, sees this dip as a window of opportunity for would-be dollar longs and advises that: “Investors should buy the dollar if it declines as a result of any “disappointmentâ€