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Gold Rises on Positive US Jobs Data, Posts Weekly Loss

December 2, 2016 at 17:35 by Andrew Moran

Even as the US labor market had a strong November, gold still rallied to end the trading week. Despite the modest gains, the yellow metal is still poised to finish off the week shedding its value for the fourth straight week.

February gold futures climbed $8.60, or 0.74%, to $1,178.00 per ounce at 16:08 GMT on Friday. Gold is on track to make gains for the first time in four sessions. Despite the increase during Friday’s trading session, gold will suffer its fourth consecutive week of losses and post a weekly loss of 0.4%.

Silver is also joining the rally. February silver futures rose $0.27, or 1.68%, to $16.78 an ounce. It will have a weekly increase of 1.2%.

Both precious metals have been battered since November 8, when Donald Trump pulled off an upset victory on Election Day. Gold has shed roughly $120 of its value, while silver has lost more than $3. Gold suffered its worst monthly loss in November since February 2013.

The yellow metal was able to muster some gains even as the US economy added jobs last month. According to the Department of Labor, the unemployment rate fell to a nine-year low of 4.6% as the national economy added 178,000 new jobs in November. The payrolls gain was below forecasts and the labor force participation rate fell to a 38-year low.

The upbeat labor report provides the Federal Reserve with further ammunition to pull the trigger on a rate hike. The Federal Open Market Committee (FOMC) will meet on December 13 and 14, when the market fully expects that Fed Chair Janet Yellen will raise interest rates for the first time since December 15. Experts suggest that the Fed will move ahead with four rate hikes next year.

According to the CME Group FedWatch tool, there is a 95% chance of a December rate hike.

This is bad news for gold because it lifts the opportunity cost and prompts investors to park their money in yield-bearing assets. With the US dollar climbing in the wake of the November jobs report, dollar-denominated commodities like gold and silver become more expensive for foreign investors.

Gold is still up nearly 20% so far this year, while silver has surged close to 40%.

If you have any questions and comments on the commodities today, use the form below to reply.

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