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Gold plummets as strong U.S. jobs report fuels heavy dollar demand

Published Nov 08, 2013 01:00PM ET
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Investing.com - Gold prices dropped on Friday after data revealed the U.S. economy picked up more jobs than expected in October, which fueled heavy dollar demand that sparked a selloff in gold markets.

Gold and the dollar trade inversely with one another.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,284.70 during U.S. afternoon hours, down 1.82%.

Gold prices hit a session low of USD1,280.70 a troy ounce and high of USD1,313.30 a troy ounce.

Gold futures were likely to find support at USD1,251.10 a troy ounce, the low from Oct. 15, and resistance at USD1,325.70, Thursday's high.

The December contract settled down 0.71% at USD1,308.50 a troy ounce on Thursday.

The Bureau of Labor Statistics reported earlier that the U.S. economy added 204,000 jobs in October, far surpassing expectations for a 125,000 increase.

The August figure was revised to 238,000 from 193,000, while the September figure was revised
to 163,000 from 148,000.

The U.S. unemployment rate ticked up to 7.3% last month from 7.2% in September, in line with expectations.

The figures fueled market sentiments that the Federal Reserve could announce plans to scale back its USD85 billion in monthly asset purchases possibly as soon as December.

Asset purchases aim to spur recovery by driving down long-term interest rates, weakening the dollar in the process, and talk of their dismantling strengthens the U.S. currency and thus weakens gold.

The better-than-expected October jobs report came a day after official data showed that the U.S. economy grew 2.8% on year in the third quarter, well beyond expectations for 2.0% growth.

Elsewhere, the Thomson Reuters/University of Michigan's preliminary consumer sentiment index for November ticked down to 72.0 from 73.2 in October, disappointing expectations for a rise to 74.5, though the report did little to support the yellow metal.

Elsewhere on the Comex, silver for December delivery was down 1.57% at USD21.318 a troy ounce, while copper for December delivery was up 0.21% and trading at USD3.255 a pound.









Gold plummets as strong U.S. jobs report fuels heavy dollar demand
 

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