Gold launches 2% rebound for biggest 1-day gain since Oct. 17 - Wealth Managers

Yellow metal holds support at $1,210 and climbs back near $1,250

Gold rebounded from session lows to rise 2% on Wednesday, briefly breaking above $1,250, to post its largest gain since Oct. 17, while silver rose about than 3%. After a slew of mixed economic data, investors are now looking to Thursday's U.S. GDP report and Friday's crucial nonfarm-payrolls report to gauge the Federal Reserve's direction on tapering its stimulus program.

In contrast to gold, U.S. stocks finished mostly lower on tapering fears, with both the S&P 500 and the Dow Jones Industrial Average racking up four-day losing streaks.

The reason for rising tapering fears? Some bright spots in U.S. economic data:

*New-home sales surged about 25% to hit their highest level in 30 years, partly because of a drop in prices, tumbling to $245,800, down from $257,400 and well below the recent highs of $279,300.

*The U.S. trade deficit fell 5.4% in October, partly because of rising petroleum exports. 

* The Fed's latest Beige Book found that the economy continues to expand at the same "modest to moderate pace" it has seen over most of the past year, though it detailed strong "concerns about future cost increases attributable to [Obamacare]." This is now the 11th consecutive Beige Book in which the Fed has heard loud concerns about theAffordable Care Act from the regional businesses it surveys.

But most importantly, private-sector hiring in November was the hottest in a year, as 215,000 jobs were added, beating expectation of 178,000, according to a report fromAutomatic Data Processing released Wednesday morning. This report, along with Thursday's weekly initial jobless claims number, is seen as a bellwether for Friday's all-important NFP data.

Already largely oversold, gold's rebound Wednesday was partly attributable to short covering. After the price held the $1,210 level, traders betting the price would fall were forced to repurchase previously sold positions, or short contracts, to neutralize bets that profit when gold prices fall.

Now the attention of investors is shifting to Friday's payrolls report. Thursday's GDP number is important, but with the Fed's stimulus policy linked to the unemployment rate, the NFP is key to predicting the Fed's next move. If the unemployment level rises or stays the same, the Fed is less likely to taper. If the unemployment rate improves, the Fed might be more inclined to reduce stimulus sooner. The Fed's next policy meeting on Dec. 17-18.

"Better-than-expected ADP today points to the likelihood of strong nonfarm payrolls," Citi analyst David Wilson said. "We are all going to watch data on Friday to see what happens.''

A strong NFP report could knock further wind out of stocks and gold, but with the latter already down more than 20% on the year and stocks off all-time record highs, the real bargain here is gold (and silver).

More information can be found online at http://www.goldbullionadvisors.com