Gold Price Tumbles to 9-Week Low after U.S. Jobs Data
By jturbin | November 3, 2012 3:45 AM EST
GOLD PRICE NEWS – The gold price turned sharply lower on Friday after the latest U.S. jobs report came in ahead of expectations and fueled a rally in the U.S. dollar. The spot price of gold dropped by as much as $32.50, or 1.9%, to $1,681.62 per ounce – its lowest level since August 31st. Alternatively, the U.S. Dollar Index climbed by 0.6% to 80.529 – its best level since September 7th. The SPDR Gold Trust (GLD), a proxy for the gold price and the world’s largest gold ETF, slid by $3.19 to $162.88 per share.
Silver came under significant pressure in conjunction with the price of gold, falling by as much as $1.22, or 3.8%, to $31.04 per ounce. In doing so, gold’s sister precious metal reached its worst level since the last day of August as well. Furthermore, both the prices of gold and silver are now on pace to post their fourth consecutive weekly declines – the first such occasion for each since September of 2011 and March of this year, respectively.
Weakness in the gold price also led to considerable selling in gold stocks, as the Market Vectors Gold Miners ETF (GDX) retreated by $1.86, or 3.6%, to $50.15 per share. However, the GDX has held up better than the price of gold in recent months and is on track for only its second straight weekly loss.
Several large-cap gold stocks posted steep declines on Friday – including Barrick Gold (ABX), Goldcorp (GG), and Newmont Mining (NEM). Barrick followed up yesterday’s 9.4% plunge after its disappointing earnings report by dropping another 2.3% to $35.87 per share. Goldcorp and Newmont fell by 4.0% to $43.58 and by 6.2% t $49.91 per share, respectively.
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Gold traders reacted in a strongly negative fashion to today’s U.S. nonfarm payrolls report for October, which showed job additions of 171,000. The figure surpassed the 125,000 consensus estimate among economists by a wide margin. As for the closely-followed unemployment rate, it rose from 7.8% to 7.9% – in-line with economists’ expectations.
Revisions to the prior two months of data was also encouraging, as the Labor Department reported that 84,000 additional jobs were added in August and September.
Commenting on the gold price sell-off, MKS Finance’s head of trading – Afshin Nabavi – noted that “The dollar got a boost on the upside, and so gold saw some long liquidation and some stops were hit.”
Looking forward, Nabavi added that “Ahead of the U.S. election the market will be nervous and undecided, so we should have volatile trading until Wednesday morning.”