Source: Marketwatch
San Francisco— Gold futures tumbled 3% Friday, prompting the benchmark February contract to tally a loss of more than $31 for the week and close at its lowest level in more than two months as the dollar picked up ground following a surprise increase in U.S. job creation in December.
Gold for February delivery closed $31.10, or 4.9%, below last week's closing level of $638 an ounce, hurt by unexpected strength in the dollar, worry about an economic slowdown and recent weakness in energy futures.
The contract finished at $606.90 an ounce Friday, down $19.30, or 3.1%, for the New York Mercantile Exchange session after touching $603, the contract's lowest level since late October.
The dollar moved higher against the euro and British pound Friday after the Labor Department said the economy added 167,000 jobs in December, while the jobless rate remained at 4.5%.
Economists were forecasting job additions of just 100,000. At the same time, average hourly earnings rose 0.5%, well ahead of the 0.3% expected, dashing any remaining hopes that the Federal Reserve will cut interest rates soon.
"What may be more telling in the latest economic statistic is not the fact the analysts' original forecasts were significantly outdone … but the finding that wage growth was very strong," said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com.
"Federal Reserve Chairman Ben Bernanke has repeatedly alluded to the possibility that the U.S. central bank will be on close watch for any signs that wage growth might be spurring an unwanted pickup in inflation," he said in e-mailed commentary.
So "for the moment, despite positive medium- to longer-term prospects, gold is exhibiting quite some jitters [in] regard [to] possible dollar-rate rises in the making," he said.
Data digestion
Ned Schmidt, editor of the Value View Gold Report, pointed out that the higher employment means that the FOMC will not likely lower interest rates any time soon, and "in the Street's mind, that means the dollar will remains strong."
But "that thinking ignores the real fundamentals: trade deficit, dollar over-owned, central banks diversifying away from the dollar," he said.
"That all means this sell off is way over done," he said, adding: "do not panic when the Street is panicking."
Other metals were broadly lower. March silver futures touched a more than two-month low of $12.12 an ounce before closing down 60.5 cents, or 4.7%, $12.23. It lost 5.5% for the short trading week. Nymex was closed on Monday and Tuesday.
January platinum lost $23.50 to end at $1,109 an ounce, losing 2.7% for the week, and March palladium shed $10.45 to close at $335.10 an ounce — down 1% from last Friday.
March copper closed down 6.7 cents at $2.535 a pound. Copper has been hit hard this week, losing 11.7% of its value since last Friday. Some market observers say the metal's decline is signaling that a slowdown in economic growth, likely one of considerable magnitude, is already underway.
On the supply side, gold warehouse stocks were unchanged at 7.53 million troy ounces as of late Thursday, according to Nymex data. Silver supplies rose by 392,431 troy ounces to 113.5 million and copper supplies fell by 83 short tons to 33,995.
In equities Friday, Coeur d'Alene Mines was among the bigger losers, with its shares down 4.5% at $4.42 on the heels of the steep losses in metals prices.
The Philadelphia Gold and Silver Index moved 1.5% lower at 132.48, while the CBOE Gold Index was at 137.03, down 1.3%, and the Amex Gold Bugs Index fell 1.5% to 312.54.
The DJ Wilshire Nonferrous Metals Index fell 0.1% to 5,650.95, the DJ Wilshire Industrial Metals Index was at 3,145.02, down 0.8%, and the DJ Wilshire General Mining Index fell 1.2% to 1,172.55.
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