Gold Plunges To End Below $1,165 On Strong US Jobs Data
San Francisco (Mar 5) Gold futures plunged to end lower for a fifth straight session on Friday, with the dollar racing toward parity against the euro and on some robust U.S. jobs growth cemented expectations the Federal Reserve will hike interest rates mid-year. Gold closed at its lowest for the year.
For the week, gold shed about 4 percent.
In some upbeat economic news, a Labor Department report on Friday showed unemployment rate to have dropped to its lowest level in well over six years in February, with employment in the U.S. climbing much more than anticipated. The U.S. created 295,000 jobs in February with the unemployment rate dropping to 5.5 percent from 5.7 percent in January. Analysts expected about 240,000 new jobs in February.
Meanwhile, a Commerce Department report showed U.S. trade deficit to have narrowed in line with analysts' estimates in January, reflecting a notable decrease in the value of imports.
Gold for April delivery, the most actively traded contract, plunged $31.90 or 2.7 percent to settle at $1,164.30 an ounce, on the Comex division of the New York Mercantile Exchange on Friday.
Gold for April delivery scaled an intraday high of $1,200.00 and a low of $1,163.00 an ounce.
On Thursday, gold ended at $1,196.20 an ounce, down $4.70 or 0.4 percent, as the dollar trended higher against a basket of some major currencies after the European Central Bank detailed its bond-buying program and on some disappointing economic data from the U.S.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 760.80 tons on Friday, from its previous close.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.69 on Friday, up from its previous close of 96.34 on Thursday in late North American trade. The dollar scaled a high of 97.73 intraday and a low of 96.30. The dollar scaled its highest in the last one year.
The euro trended lower against the dollar at $1.0846 on Friday, as compared to its previous close of $1.1029 on Thursday in late North American trade. The euro scaled a high of $1.1035 intraday and a low of $1.0843, its lowest in the last one year.
In economic news, a Commerce Department report on Friday showed U.S. trade deficit to have narrowed in line with estimates in January, reflecting a notable decrease in the value of imports.
U.S. trade deficit narrowed to $41.8 billion in January from a revised $45.6 billion in December, which was in line with the consensus estimate.
The eurozone economy expanded as initially estimated in the fourth quarter on broad-based support from spending, investment and exports. Gross domestic product grew 0.3 percent sequentially, slightly faster than the third quarter's 0.2 percent expansion, second estimates from Eurostat showed Friday. The statistical office confirmed the estimate released on February 13.
Germany's industrial production grew for the fifth straight month in January signaling that growth is gaining a foothold in the biggest euro area economy, although orders data cast doubt over recovery.
Industrial production grew 0.6 percent in January from December, which was the fifth consecutive rise, data from Destatis showed Friday. This was also the first time since early 2011 that output rose for five straight months. The monthly rise in January was faster than a 0.5 percent rise forecast by economists, but slower than December's revised 1 percent growth.
The French trade deficit decreased unexpectedly in January, the customs office reported Friday. The trade gap widened to EUR 3.7 billion in January from EUR 3.3 billion in December and November. The deficit was forecast to narrow to EUR 3 billion.