Investing.com -- Gold crashed to fresh three-month lows on Friday amid a surging dollar, as a robust U.S. jobs report augmented hawkish arguments for a December interest rate hike by the Federal Reserve.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,084.60 and $1,109.70 an ounce before settling at $1,088.00, down 16.20 or 1.47% on the session. Gold has fallen nearly 8% since the start of trading on Oct. 28, the first of its current eight-session losing streak. At one point on Friday, gold fell to its lowest level since Aug. 7. The precious metal is nearing its six-and a half year low from July when it plunged below $1,080 an ounce during a 10-day skid.
Gold likely gained support at $1,084.60, the low from July 24 and was met with resistance at $1,141.80, the high from Nov. 1.
On Friday morning, the U.S. Department of Labor said in its October national employment report that nonfarm payrolls surged by 271,000 last month, significantly above expectations for a consensus gain of 190,000. The sharp gains marked the largest increase in U.S. nonfarm jobs since last December. Private payrolls also soared by 268,000 in October, above forecasts of a 174,000 increase.
Large upswings in Professional and Business Services and Trade & Transportation, as well as Retail Trade ahead of the Holiday season, bolstered overall job gains. Within the Professional and Business Services sector, which added 78,000 positions, temporary jobs rose by 25,000. Temporary hiring is a leading indicator for future employment. Restrained by weak export levels, Manufacturing employment remained flat, following two prior months of declines.
One month after wages nationwide ended September unchanged, average hourly earnings jumped 0.4%, considerably above forecasts of a 0.2% gain. Over the last 12 months, hourly wages have spiked by 2.5%, their strongest annual increase in more than six years. The unemployment rate, meanwhile, dipped by 0.1% to 5.0%, in line with consensus estimates.
The U-6 unemployment rate, a broader gauge of the national employment situation, fell by 0.2% to 9.8%, its lowest level since May, 2008. The reading, which measures the total level of unemployed workers plus those marginally attached to the labor force, stood at 11.1% last October. The indicator also accounts for workers who are no longer looking for a job, but have looked for one over the last 12 months.
By comparison, the alternative measure of underemployment peaked at 18% in January, 2010, as the nation continued to recover from the Financial Crisis. The U-6 rate is a preferred measure of unemployment by Fed chair Janet Yellen as she assesses the strength of the U.S. labor market.
On Wednesday in testimony before the House Financial Services Committee, Yellen sent strong hints that the Federal Open Market Committee could raise short-term interest rates at its December meeting if the economy demonstrated continued improvement. The FOMC's benchmark Federal Funds Rate has remained at its current near-zero level since 2009. Following Friday's optimistic employment report, the CME Group (O:CME) increased the probability of a December rate hike to 70%, up from a percentage in the low 60s in response to Yellen's comments on Capitol Hill.
A rate hike is considered bearish for gold, which struggles to compete with high-yield bearing assets.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, shot up more than 1.25% to an intraday high of 99.47. The index soared to its highest level since mid-April.
The Fed's first rate hike in nearly a decade is viewed as bullish for the dollar, as investors abroad pile into the greenback in an effort to capitalize on higher yields. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for December delivery fell 0.278 or 1.88% to 14.705 an ounce.
Copper for December delivery lost 0.013 or 0.56% to 2.242 a pound.