Precious metals drop on Friday Comex

Job data and strong dollar weigh on prices

Bullion prices dropped on Friday, 08 November 2013 after a much stronger-than-expected jobs report boosted expectations that the Federal Reserve could begin to reduce bond buying as early as next month. A rally in the dollar index also weighed on precious metals.

December gold slid below the $1300.00 per ounce level as the dollar index gained strength. The yellow metal fell from its session high of $1310.20 per ounce and touched a session low of $1280.50 per ounce in morning pit trade. Unable to gain momentum, it settled 1.8% lower at $1284.60 per ounce, booking a 2.2% loss for the week.

December silver also traded lower after slipping from its session high of $21.78 per ounce set moments after pit trade opened. It fell as low as $21.25 per ounce and eventually settled at $21.32 per ounce, or 1.6% lower. Friday's decline brought losses for the week to 2.4%.

On Friday, it was announced that nonfarm payrolls increased by 204,000 in October (consensus 100,000). The immediate reaction was consistent with increased expectations of tapering sooner rather than later as bonds and futures fell to lows.

Taking another look through rest of the data data, with the exception of government, every sector reported positive payroll gains in October. That included a 44,400 increase in retail employees. It has been reported that retailers started hiring earlier than normal for the holiday season.

Private payrolls added 212,000 new jobs in October, up from 150,000 in September. That was the biggest monthly gain since February when 319,000 jobs were added. The consensus expected only 110,000 new private jobs. The unemployment rate increased to 7.3% in October from 7.2% in September, as expected.

Separately, the November University of Michigan Consumer Sentiment Index dropped to 72.0 in the preliminary reading from 73.2 in October. The consensus expected the index to increase to 75.0. With the government shutdown over and the economy returning to its normal, albeit weak, trends, it was expected that consumer sentiment would return to September (77.5) or August (82.1) levels.

The dollar also strengthened, sending the Dollar Index higher by 0.5% to 81.24.

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