Gold prices fell sharply on Friday, settling below $1,400 an ounce level after the Labor Department’s monthly nonfarm payrolls report showed better than expected improvement in the labor market, dashing hopes that the Federal Reserve would keep its multi-billion dollar asset purchase for an extended period of time. Silver prices also plunged in trading on Friday.
U.S. gold futures for August delivery fell 2.30% or $32.80 to settle at $1,383 an ounce, at the COMEX division of the New York Mercantile Exchange session while spot gold was last down 2.11% to $1,383.30 an ounce.
For the week, gold futures logged 0.7% loss.
The Labor Department said that the U.S. economy added 175,000 jobs in May compared to economists’ forecast for 160,000 new job additions. Although market strategists believe that the job numbers are not strong enough to convince the Fed to start winding down its bond purchase program right away, speculation is rife that the tapering could start in few weeks’ time. The Fed’s minutes from latest FOMC (held on April 30–May 1) showed that several policymakers favored deceleration of the bond purchase program from June.
The better than expected job data also boosted investors’ risk appetite, with all major U.S. averages climbing sharply higher. The data also bolstered the U.S. dollar, making dollar priced commodities, including gold more expensive for buyers dealing in other currencies.
Earlier this week, the yellow metal received support from broadly lower U.S. dollar. Investors were wary of the U.S. dollar ahead of the job data as any weakness in the numbers could have forced the Fed to continue with its monetary easing measures for a longer period of time.
Meanwhile holdings of the SPDR Gold Trust (ETF) (NYSE: GLD
), dropped 2.7 tons to 1,007.74 tons on Thursday, showed a data provided by Reuters.
Silver futures were last down 4.41% to $21.70 an ounce.
In late trading, the iShares Silver Trust (ETF) (NYSE: SLV
) was down 4.24%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ
) was down 8.39%.