U.S. nonfarm payrolls rose by just 74,000 in December, way below consensus estimates of around 200,000.
This sparked a rally in gold on hopes that the poor US non farm payrolls data may slacken the pace of QE3 easing by the US Federal Reserve. This is likely to support the prices of gold at least in the next few days. Check gold rates in your city here
The US Federal Reserve has been buying assets worth $65 billion since the start of this month, more popularly known as QE3.
It was anticipated that as the US jobs data improves, the US Fed would reduce its asset purchase or QE3 programme. A reduction in this programme reduces liquidity and hence is not good news for gold. The QE3 undertaken by the US Fed increases liquidity and this liquidity finds its way in asset classes like gold.
With the poor US non farm payrolls data it is likely that the US Federal Reserve would not reduce its asset purchase programme, pushing gold prices higher.