Gold price bounces around on jobs, inflation data

The pull-back of gold prices continued on Thursday as traders booked profits after the metal's run-up to 3-month highs at the start of the week, and a drop in weekly jobless claims in the US showed a brighter jobs picture.

Employment data is a key consideration for the US Federal Reserve in setting monetary policy and after two weak reports in January and December, today's figures indicated the downward trend in unemployment remains largely intact.

The news strengthened the dollar and pushed the gold price – which usually moves in the opposite direction of the US currency – to a session low of $1,307.10 shortly after the open.

In mid-day trade on the Comex division of the New York Mercantile Exchange, gold futures for April delivery bounced off the initial lows to $1,315.90 an ounce, down $4.50 from Tuesday's close.

The recovery from was on the back of stronger than expected – albeit still subdued – inflation figures and a sharp drop in the a manufacturing index compiled by the Philadelphia Fed.

The reversal in the positive 2014 trend for the gold price – still up 9.6% this year – began yesterday after the release of Fed minutes that showed a growing number of policy hawks at the Fed favour a quicker end to the central bank's stimulus program.

However, recent poor economic numbers out of the US which the FOMC would not have considered when it made the decision to trim the quantitative easing program by another $10 billion – have strengthened the hands of the doves on the rate-setting committee.

Monetary expansion, particularly since the financial crisis, has been a massive boon for the gold price, but a gradual reduction in asset purchases under the stimulus program now appears to be baked into the price.

The median forecast for the fourth quarter 2014 of the nine gold analysts tracked business news wire Bloomberg is for an average $1,165 an ounce gold price.