Gold tumbles 2.5 pct on non-farm payrolls surprise
London (July 5) Gold fell heavily on Friday afternoon after the release of the monthly US jobs report, with forecast-beating job creation numbers strengthening the argument for the withdrawal of loose monetary policy.
Spot gold was last at $1,217.50/1,218.50 per ounce, down $31.15 or 2.5 percent on the previous day's close.
The June change in US non-farm employment came in at 195,000, well above the consensus forecast of just 163,000, although the unemployment rate remained unchanged at 7.6 percent - it was forecast to fall 0.1 percentage points.
Average hourly earnings grew 0.4 percent, up from 0.2 percent, and the May non-farm payrolls figure was also revised upwards to 195,000 from 175,000 previously
"US data pointed to strength in May, strong jobs growth momentum in the present and the potential for strong growth in the future via strong average hourly earnings," FastMarkets analyst Jono Remington-Hobbs said.
"This coupled with comments from Federal Reserve chairman Ben Bernanke regarding tapering and ECB president Mario Draghi's move to introduce forward guidance at the ECB has put the dollar back firmly on the bid and put the industrial metals under further pressure," he added.
The Fed could begin to taper its quantitative easing programme from the September FOMC meeting, he predicted, although the initial reduction is likely to be small to limit any volatility that would result.
The central bank is currently committed to purchasing $85 billion in new debt per month indefinitely. Accommodative measures are supportive of gold because extra liquidity tends to debase the dollar and create future inflationary risks.
In yesterday's session, the precious metals complex was largely unmoved by statements from the European Central Bank and Bank of England, both of which kept rates unchanged and only moved to reassure markets through foreword guidance.
This sent the euro to its lowest against the dollar since May at one point yesterday although it has since recovered to 1.2832.
The physical gold market remains soft, with drops in exchange-traded fund holdings dominating the market's focus, traders told FastMarkets. Still, physical premiums have proved robust and even increased in many locations while smelters close for maintenance during the normally quiet third quarter.
In India - where demand has struggled since the government raised import duties again in June - both demand and premiums have risen somewhat in the past few weeks. The premium there has climbed as high as $8 from a small deficit in recent weeks and demand has improved, albeit from very low levels.
In the rest of the precious metals, silver was the worst performer, falling 73 cents to $18.83/18.88 per ounce - a drop of nearly four percent.
The platinum group metals were better performers. Platinum fell $23 or 1.7 percent to $1,317/1,322 per ounce and palladium slipped $2 to $673/678.
