Gold / Silver / Copper futures - weekly outlook: December 8 - 12

Investing.com - Gold futures tumbled sharply on Friday, as robust U.S. nonfarm payrolls data fuelled optimism over the strength of the economy and boosted expectations that the Federal Reserve will begin to raise rates sooner and faster than previously thought.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery fell by as much as 1.76% to hit a session low of $1,186.40 a troy ounce, before settling at $1,190.40 by close of trade, down $17.30, or 1.43%.

Futures were likely to find support at $1,141.70, the low from December 1, and resistance at $1,215.00, the high from December 3.

In a report, the Department of Labor said that the U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

October’s figure was revised up to 243,000 from a previously reported 214,000, while the unemployment rate remained unchanged at a six-year low of 5.8%.

The upbeat data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner than markets are expecting.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

The US dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Despite Friday's losses, gold prices tacked on $14.90, or 1.25%, on the week, thanks to a sharp short-covering rally recorded on December 1.

In the week ahead investors will be awaiting Thursday's U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

Also on the Comex, silver futures for March delivery sank 31.7 cents, or 1.91%, on Friday to settle the week at $16.25 a troy ounce by close of trade.

The March silver futures contract climbed 70.0 cents, or 4.3%, on the week.

Elsewhere in metals trading, copper for March delivery dipped 1.2 cents, or 0.41%, on Friday to settle at $2.902 a pound by a close of trade.

Comex copper advanced 5.8 cents, or 1.99%, on the week, on hopes for broad-based stimulus from central banks in China, Japan and Europe.

China is to produce what will be closely watched reports on trade, consumer prices and industrial production in the week ahead.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.