Investing.com - Gold 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 April delivery plunged $28.10, or 2.23%, to settle at $1,234.60 a troy ounce by close of trade on Friday.
Prices touched $1,228.60 earlier, the lowest level since January 15. For the week, gold lost $44.60, or 3.49%, the second straight weekly decline.
Futures were likely to find support at $1,226.10, the low from January 15, and resistance at $1,269.00, the high from February 6.
Also on the Comex, silver futures for March delivery shed 50.2 cents, or 2.92%, on Friday to settle at $16.69 a troy ounce by close of trade. Earlier in the day, prices hit $16.54, a level not seen since January 12.
For the week, the March silver futures contract slumped 46.0 cents, or 2.99%, also the second consecutive weekly loss.
The Labor Department reported that the U.S. economy added 257,000 jobs in January, far more than the 234,000 forecast by economists. December’s figure was revised to 329,000 from a previously reported 252,000.
While the unemployment rate ticked up to 5.7% last month from December’s 5.6%, hourly earnings and the participation rate both saw increases in January.
The upbeat data added to the view that the strengthening economic recovery may prompt the Fed to start raising rates from near zero levels as early as June.
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, rallied 1.26% on Friday to end the week at 94.84.
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.
Meanwhile, the euro remained under pressure as concerns over Greek debt negotiations continued to weigh on market sentiment.
Standard and Poor’s downgraded Greece to B- from B late Friday, one notch above default, and kept the outlook at "negative", indicating that further ratings cuts are possible.
Elsewhere in metals trading, copper for March delivery dipped 0.9 cents, or 0.37%, on Friday to end at $2.585 a pound by close of trade, as a broadly stronger U.S. dollar weighed.
Despite Friday's mild losses, Comex copper tacked on 10.9 cents, or 3.69%, on the week, the first weekly gain in five weeks, after China's central bank cut banks' reserve requirement ratios in an effort to boost lending and spur economic activity.
Over the weekend, China reported a trade surplus of $60.0 billion in January, compared to expectations for $48.9 billion and up from a surplus of $49.6 in December.
Exports slumped 3.3% from a year earlier last month, missing expectations for a 6.3% increase, while imports tumbled 19.9%, much worse than forecasts for a decline of 3.0%.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
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.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Tuesday, February 10
China is to report on consumer and producer price inflation.
Wednesday, February 11
The euro group of finance ministers is to meet in Brussels.
Thursday, February 12
The U.S. is to release reports on retail sales and initial jobless claims.
Friday, February 13
The euro zone is to release preliminary data on economic growth.
The U.S. is to round up the week with preliminary data on consumer sentiment.