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Gold Falls as Strong Payrolls Data Send Risk Assets Higher

Investing.com -- Gold prices tumbled on Friday after a stronger-than-expected U.S. labor market report sent risk assets soaring and drained money from havens.


By 11.38 AM ET (1638 GMT), gold futures for delivery on the Comex exchange were down 1.3% at $1,463.65 a troy ounce, having given up almost all the gains made in a week of otherwise patchy economic data, against a worsening backdrop as regards the U.S.-China trade war. Spot gold was down 1.1% at $1,459.08.


The U.S. economy added 266,000 jobs in November, helped by the return to work of people affected by General Motors' strike in October. The unemployment rate fell to 3.5% and average weekly earnings growth inched up to an annual rate of 3.1% from 3.0% in the previous two months.

In all, the report made it less likely than ever that the Federal Reserve will return to cutting interest rates any time soon, and bond yields rose by 3 to 4 basis points all along the yield curve. Higher yields make non-interest-bearing gold less attractive by comparison.


"The three-month average job gain in the U.S. is back over 200,000," Northern Trust's chief economist Carl Tannenbaum said via Twitter. "This does not feel like an economy that at great risk of recession; the Fed will likely be on hold for a while."

The jobs data turned around a market that was otherwise ready to have some of its gloomier fears realized.

Germany's industrial production slumped by 5.3% year-on-year in October, the country's statistics office reported earlier on Friday. That's the steepest year-on-year drop since 2009. Meanwhile Canada's jobs market had its worst month since January 2018, with a 71,000 drop in employment.

Elsewhere, silver futures also fell sharply, losing 2.5% to $16.60 an ounce, while platinum fell 0.5% to $896.10 an ounce. By contrast, copper futures, traditionally a reliable proxy for industrial activity, hit their highest in a month with a 1.9% gain to $2.71 a pound.


Germany's industrial production slumped by 5.3% year on year in October, the country's statistics office reported earlier on Friday. That's the steepest year-on-year drop since 2009. Meanwhile Canada's jobs market had its worst month since January 2018, with a 71,000 drop in employment.

Elsewhere, silver futures also fell sharply, losing 2.5% to $16.60 an ounce, while platinum fell 0.5% to $896.10 an ounce. By contrast, copper futures, traditionally a reliable proxy for industrial activity, hit their highest in a month with a 1.9% gain to $2.71 a pound.

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