The price of Gold has plunged and the dollar has rallied strongly after the US government reported a surprise drop in the unemployment rate to 10 percent.
Those that felt that Gold was not a “-dangerous”- trade are looking a little shifty this evening. Gold is currently trading at $1149 an ounce, down nearly $59 on the day and way below the mystical $1200 mark, much beloved of the recent bulls/bandwagon merchants.
Meanwhile, the U.S. Dollar has surged against all major currencies. Pre-report estimates were for the unemployment rate to remain unchanged at 10.2 percent. In addition, the total jobs lost came in at 11,000, well above the consensus estimate of 125,000. The October job loss was also revised lower.
Traders rushed to buy the Dollar on the back of the surprise news, as it raises the possibility that the Federal Reserve might be forced to raise interest rates much sooner than most had expected.
One City of London Prop trader, who wished to remain unnamed, said that he had been skinned after betting that the unemployment numbers would come in at worse than consensus-
“-When the 10000 number came in, there was an audible gasp, followed by silence…- then everybody rushed to close out their positions. Once again the market has taught us all a hard lesson…- I don’-t know of a single person who was short Gold, long the dollar at this time.”-