Gold fell on Friday after a U.S. jobs report beat expectations and strengthened the case for a Federal Reserve rate hike in December. The metal still headed for a weekly gain of more than 4%, helped by a sharp drop in crude prices.
Gold extended losses on Friday after the U.S. jobs report beat expectations and bolstered the case for a Fed interest rate hike in December. The yellow metal remained on track for a weekly increase.
By 09:52 ET, spot gold had fallen by 1.1% to $4,043.78 an ounce. December gold futures slipped by 1.5% to $4,052.30 an ounce, and a firmer dollar also took some shine off gold because bullion is priced in the greenback.
Payrolls beat forecasts
The U.S. economy added far more jobs than anticipated in October, while the unemployment rate dipped. Nonfarm payrolls jumped to 165,000, up from an upwardly revised 60,000 in September and above economists' expectations of 65,000, according to the non-farm payrolls data from the Bureau of Labor Statistics.
Jeffrey Roach, Chief Economist at LPL Financial, said the job market gives the Federal Open Market Committee support to raise rates in December. Higher rates can weigh on gold by increasing the opportunity cost of holding the non-yielding asset.
Following the report, markets continued to price in a roughly three-in-four probability of a 25-basis-point rate hike next month, according to CME FedWatch. Those chances had been dented on Thursday, when a deep stock-market rout rattled investors' confidence in an artificial intelligence boom.
Crude's drop supports the weekly gain
Oil prices were choppy on Friday but remained on pace for a steep weekly drop. Analysts have suggested a correlation between gold and crude, given the impact of an energy-price shock on interest rate expectations.
Hopes have risen that Democrats will push President Donald Trump to quickly end the Iran war, which could trigger a retreat in oil prices and potentially weaken the argument for Fed rate hikes. Against this backdrop, crude prices have fallen sharply this week, underpinning a weekly advance in gold of more than 4%.
Source: Investing.com
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