Precious metals slump at Comex on Friday

Stronger-than-expected jobs report dulled its shine as a safe haven

Bullion prices slumped on Friday, 05 December 2014 at Comex as a stronger-than-expected jobs report dulled its shine as a safe haven. Stronger economic data raise the possibility of an interest rate hike which weakens demand for gold since it does not yield interest.

Gold for February delivery fell $17.30, or 1.4%, to settle at $1,190.40 an ounce. But the precious metal still managed to close out the week 1.3% higher.

March silver lost 32 cents, or 1.9%, to $16.26 an ounce.

The Labor Department said the U.S. added 321,000 jobs in November, the biggest gain since January 2012 and well beyond the 235,000 that were expected. Average hourly wages jumped 9 cents, or 0.4%, after two weak readings, although the 12-month increase was little changed at 2.1%.

A day earlier, gold closed in the red but held tight to the key $1,200-an-ounce level after the European Central Bank decided to hold off on additional stimulus. The ECB left its key interest rate unchanged at 0.05% and announced that it will wait until 2015 to consider additional market supportive measures, including buying European sovereign debt.

Among other data expected for the day, gains in hourly earnings and the average workweek led to a 0.9% increase in aggregate wages, which was the largest increase since 2006. The unemployment rate held at 5.8%, as expected.

The U.S. trade deficit narrowed slightly in October, falling from an upwardly revised $43.60 billion (from $43.00 billion) in September to $43.40 billion while the consensus expected a decline to $42.00 billion. The goods deficit was virtually unchanged at $62.70 billion while the services surplus increased to $19.20 billion from $19.10 billion. Factory orders declined 0.7% in October after declining an upwardly revised 0.5% (from -0.6%) while the consensus expected an increase of 0.3%. The large downside surprise resulted from weaker oil prices, which caused a 6.5% decline in petroleum refinery orders. This led to a 1.5% decline in nondurable goods orders after those orders declined only 0.2% in September. Separately, the Consumer Credit report for October showed an increase of $13.20 billion, which was lower than the consensus estimate of $16.50 billion.

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