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Gold Dips to Four-Month Low amid Strong US Jobs Report

December 8, 2017 at 16:23 by Andrew Moran

Gold futures are slipping to their lowest levels since the end of July as the latest jobs report suggests the US economy is roaring. The yellow metal is also poised for a substantial weekly decline.

February gold futures tumbled $3.60, or 0.29%, to $1,249.50 per ounce at 15:00 GMT on Friday. Gold prices are settling at their worst levels in more than four months, and are on track to record a weekly drop of 2.7%, which is the worst weekly performance since May.

Silver, the sister commodity to gold, is trying to post minor gains to finish the trading week. March silver futures rose $0.01, or 0.10%, to $15.81 an ounce. The white metal will, too, post a weekly dip of 1%.

According to the Bureau of Economic Analysis (BEA), the US economy added 228,000 jobs in November, which is higher than the initial projections of 195,000 jobs. The unemployment rate remained unchanged at 4.1%. The biggest industry gains were found in education, healthcare, business services, manufacturing, and construction.

The US dollar is climbing higher on the report as the greenback surged 0.27%. A strengthening dollar is bad for dollar-denominated commodities like gold and silver because it makes more expensive for foreign investors to purchase.

All of this should provide the Federal Reserve with greater ammunition to pull the trigger on one more rate hike at this month’s Federal Open Market Committee (FOMC) policy meeting. The US central bank has raised interest rates four times over the last 12 months, but Fed officials have warned that they may adopt a more gradual approach to normalization next year.

Gold is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends traders into yield-bearing assets. Analysts say that the widely anticipated December rate hike has already been factored into precious metal prices.

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