April 6, 2012, 3:52 p.m. ET
Article from The Wall Street Journal
--Comex floor and Globex electronic trading closed Friday
--Weaker-than-expected employment likely to boost interest in gold
--Indian jewelers end tax-hike protest, due to return to gold market
By Tatyana Shumsky
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Gold futures are likely to rally when trading reopens Monday, as the market has its first chance to react to weaker-than-expected U.S. employment data and the return of Indian jewelers to the global bullion market.
The pace of U.S. job creation slowed in March, surprising markets Friday. The U.S. economy added just 120,000 nonfarm payrolls last month--half the number that the economy added in February, and well below the expected 203,000.
"Today's number affirms that the economy remains a bit underwhelming in its momentum," said Mark Luschini, chief investment strategist at financial-services firm Janney Montgomery Scott.
Gold traders must wait until Monday to see how the precious metal, widely considered a haven from economic uncertainty, responds to the disappointing employment news because the Comex floor and Globex electronic trading is shut for Easter.
Gold for April delivery settled down 2.4% for the week at $1,628.50 a troy ounce on Comex. The decline came as the minutes of the March 13 meeting of the Federal Reserve's policy-making committee pushed the pendulum toward a lower chance of quantitative easing, which would stimulate the economy and devalue the U.S. dollar.
"Weaker-than-expected jobs data moves that pendulum back slightly," and precious metals would benefit from the news, said Dave Meger, director of metals trading at Vision Financial Markets, a Chicago-based brokerage.
Jason Schenker, president of Prestige Economics, said the employment numbers also put the heat on Fed Chairman Ben Bernanke when he gives a scheduled speech in Atlanta on Monday evening.
Bernanke will likely "reassure markets in the wake of this weaker piece of jobs data, and...hint at potential additional actions available to the Fed," Schenker said.
Gold prices also stand to benefit from renewed buying interest in India, the world's top consumer of the precious metal. India's gold-jewelry trade associations agreed Friday to end a 20-day strike, after Finance Minister Pranab Mukherjee promised to look into reducing or scrapping newly implemented gold taxes.
Indian retailers have been on strike ever since the government declared in mid-March that it would double import taxes on gold and impose excise taxes on most gold jewelry.
The strike has put a damper on gold prices globally as gold imports into India have all but ground to a halt.
Now that the strike is over, "Indian demand should be much stronger than what we have seen, but not a blast," said Bart Melek, head of commodity strategy at TD Securities. The higher taxes are still in effect, which will damp purchases, he said.
-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com
Article from The Wall Street Journal