Stronger-than-expected jobs report dulled its shine as a safe haven
Bullion prices slumped on Friday, 05 December 2014 at Comex as a stronger-than-expected jobs report dulled its shine as a safe haven. Stronger economic data raise the possibility of an interest rate hike which weakens demand for gold since it does not yield interest.
Gold for February delivery fell $17.30, or 1.4%, to settle at $1,190.40 an ounce. But the precious metal still managed to close out the week 1.3% higher.
March silver lost 32 cents, or 1.9%, to $16.26 an ounce.
The Labor Department said the U.S. added 321,000 jobs in November, the biggest gain since January 2012 and well beyond the 235,000 that were expected. Average hourly wages jumped 9 cents, or 0.4%, after two weak readings, although the 12-month increase was little changed at 2.1%.
A day earlier, gold closed in the red but held tight to the key $1,200-an-ounce level after the European Central Bank decided to hold off on additional stimulus. The ECB left its key interest rate unchanged at 0.05% and announced that it will wait until 2015 to consider additional market supportive measures, including buying European sovereign debt.
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Among other data expected for the day, gains in hourly earnings and the average workweek led to a 0.9% increase in aggregate wages, which was the largest increase since 2006. The unemployment rate held at 5.8%, as expected.
The U.S. trade deficit narrowed slightly in October, falling from an upwardly revised $43.60 billion (from $43.00 billion) in September to $43.40 billion while the consensus expected a decline to $42.00 billion. The goods deficit was virtually unchanged at $62.70 billion while the services surplus increased to $19.20 billion from $19.10 billion. Factory orders declined 0.7% in October after declining an upwardly revised 0.5% (from -0.6%) while the consensus expected an increase of 0.3%. The large downside surprise resulted from weaker oil prices, which caused a 6.5% decline in petroleum refinery orders. This led to a 1.5% decline in nondurable goods orders after those orders declined only 0.2% in September. Separately, the Consumer Credit report for October showed an increase of $13.20 billion, which was lower than the consensus estimate of $16.50 billion.
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