Gold loses luster, sinks to 3-week low on strong U.S. jobs repor

2015-02-08

SAN FRANCISCO — Gold futures on Friday sank more than 3% to settle at their lowest level since mid-January after an encouraging U.S. jobs report provided support for the dollar, drawing investors’ attention away from the haven metal.

Gold for April delivery  shed $28.10, or 2.2%, to settle at $1,234.60 an ounce. They marked their lowest settlement since Jan. 14, according to FactSet data. Prices saw a loss of 3.5% for the week.

March silver  also lost 50 cents, or 2.9%, to end at $16.694 an ounce, with prices down around 3% for the week.

Data showed the U.S. added 257,000 new jobs in January, kicking off the year on a strong footing, amid evidence that an influx of hiring in the past year may finally be pushing wages higher. Average hourly earnings recorded the biggest gain in more than six years.

The solid jobs number “has hawkish implications with regard to Fed policy as investors speculate that strong U.S. data increases the likelihood of a rate hike sooner than later, which is bearish for gold,” said Tyler Richey, an analyst for the 7:00’s Report, which offers daily markets commentary.

Charles Plosser, president of the Philadelphia Fed, told CNBC in an interview on Friday, that it is hard not to justify not hiking rates, and the U.S. central bank needs to “look through” low inflation as temporary.

Higher interest rates may prompt investors to sell gold because it doesn’t offer interest.

The dollar  shot higher Friday, further dulling gold’s appeal as a safe-haven asset. A stronger dollar tends to weigh on dollar-denominated assets.

In other metals action Friday, platinum for April delivery   shed $28.10, or 2.3%, to $1,221.60 an ounce, down 1.3% for the week, while palladium for March delivery  lost $14.40, or 1.8%, to $781.30 an ounce, and was up 1.2% for the week. High-grade copper for March delivery  fell a penny, or 0.4%, to $2.586 a pound, up more than 3% for the week.