Wow. That was quick. Thwack. Gold got its sunny little head lopped off (for now)…just after it had peeped over $1225 ..and this morning fell to the sub $1180´s level (>$50 decline), apparently on the jobs report, which shows jobs decreased by 11, 000 in November, considerably less than the 30,000 predicted in the most optimistic forecast. That signals a quicker end to the recession and the likelihood that Bernanke will raise interest rates, which in turn is dollar positive.

The dollar index is over 75 now and looking good.

“The data point to a transition in the economy from a deep recession to a modest recovery,” said William Sullivan, chief economist, JVB Financial Group in Florida.

“This will encourage the Fed to be more vocal about an exit strategy from their highly accommodative posture.”

A look at the Bureau of Labor Statistics Report for November 2009 (non-farm payrolls) shows that most of the jobs were added in temporary employment and in health care – which is very inflected by government spending and programs.

That means in the rest of the economy, the real economy, the situation isn´t better at all.

And when you go through the rest of the numbers, that´s the case. Indeed, some numbers are significantly worse.

"The number of long-term unemployed
(those jobless for 27 weeks and over) rose by 293,000 to 5.9 million. The
percentage of unemployed persons jobless for 27 weeks or more increased by
2.7 percentage points to 38.3 percent.

Over at GFT Forex, Kathy Lien also expresses some suspicion about the numbers, implying that they might be due for a revision in the future and contrasting them with the Consumer Confidence numbers and the employment part of the ISM reports.

But traders, probably looking for a reason to sell gold at such overbought prices, took the improvement in temp employment as a sign of better things to come, translated that into a possible interest rate hike, and jumped out of stocks and gold.

Which suggests that the move up in gold was not so much a result of perception of it as a safe-haven as perception of it as a currency and a vehicle of speculation.

And the moral of this story is a lot of what´s going on is not the market. It´s not supply and demand. It´s more like smoke and mirrors..