By Debbie Carlson and Allen Sykora of Kitco News
Chicago (Kitco News): Despite gold’s break following the surprising U.S. unemployment report Friday, the uptrend for gold is intact, but it will likely take an unforeseen event to push it to fresh highs in the near term.

December gold futures prices at 1:15 p.m. EDT were trading around $1,251 an ounce on the Comex division of the New York Mercantile Exchange, stumbling after U.S. non-farm payrolls showed only 54,000 jobs were lost in the month of August, far less than the about 110,000 that were expected to be shed. The news gave a bid to the platinum group metals, which had been holding firmer for the week on a strike situation in South Africa and good economic data.

“We saw some long profit-taking today. Those who came in late on the safety bid are coming out now,” said Frank Lesh, broker and futures analyst with FuturePath Trading, who said even though gold weakened Friday, the trend for the yellow metal is still higher.

He also pointed out a $10 loss for gold isn’t much considering the price level. “Sometimes gold can move $10 either way on just trading,” he said.

Analysts said one economic report does not make a trend and that the greater uneasy global economic situation will keep a floor under gold.

“Getting a number like we did today is a bit surprising, but it doesn’t change the picture. It’s better than expected, but we’re still looking at a U-shaped recovery (in the U.S.),” said Bill O’Neill, one of the principals with LOGIC Advisors.

U.S. futures markets are closed Monday because of the Labor Day holiday; trading resumes Tuesday. Next week’s economic calendar is light, so gold might look elsewhere for direction. Lesh said gold could see a bit of a drag if the trend of fund managers moving money out of Treasuries and into equities continues.

Charles Nedoss, senior market strategist with Olympus Futures, suggested gold could fare better next week no matter what equities do. Should stock indices make a technical breakout higher, this could prompt some buying in gold from those who anticipate that inflation will kick in whenever the economy recovers, he said.

Conversely, should stocks break lower, “fear buying” is likely to return to gold from investors avoiding risk in other assets. These participants may conclude “the stock market has petered out, so it’s time to put the gold trade back on.”

Lesh said he believes gold will see an upward bias, but isn’t sure there’s enough momentum to take it beyond the $1,260s unless some unforeseen circumstance happens. He puts support at $1,211 to $1,200 and said a move to $1,200 would be “healthy” for gold.

O’Neill said European and Asian demand picks up as gold experiences some breaks.

Nedoss also looks gold to test the higher end of its recent range next week.

“I think you come up and challenge the $1,260 area,” he said. “A close above $1,270 next week would be very, very positive…I think the market has enough momentum that you could take those numbers out.”

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