Gold prices look to post first weekly loss in a month

Gold futures headed lower, with better-than-expected U.S. jobs data fueling strength in U.S. Treasury yields and the dollar, dulling investor interest in gold and setting prices on track for their first weekly loss in a month.

Gold for December delivery GC00, -1.61% GCG24, -1.61% fell $22.90, or 1.1%, to $2,023.50 an ounce on Comex, with prices based on the most-active contract eyeing their lowest settlement since Nov. 27, FactSet data show. For the week, prices trade more than 3% lower, poised for their first weekly loss since the week ended Nov. 10.

The price decline for the precious metal followed the release of a U.S. economic report that “suggested the U.S. economy is presently in a pretty good spot,” Jim Wyckoff, senior analyst at Kitco.com, said in market commentary.

The number of new U.S. jobs created in November rose by 199,000, beating the 190,000 gain forecast by economists polled by The Wall Street Journal.

The unemployment rate fell to a four-month low of 3.7% from 3.9%, government data showed Friday, while average hourly earnings rose by a sharp 0.4%, the largest rise in four months.

The jobs report “appears to fall very mildly into the camp of the U.S. monetary policy hawks, who want the Federal Reserve to continue its interest-rate-increasing cycle,” said Wyckoff. “However, others are calling today’s jobs data a ‘Goldilocks’ report, which is not too hot and not too cold for the general marketplace.”

Separately, the University of Michigan’s gauge of consumer sentiment rose to a preliminary reading of 69.4 in December— the highest since August and up from a six-month low of 61.3 in November.

“It was a textbook reaction in gold in response to the stronger jobs and consumer sentiment data, with the metal falling, dollar and yields rising,” Fawad Razaqzada, market analyst at City Index and FOREX.com, told MarketWatch.

The ICE U.S. Dollar index was up 0.5% at 104.01 in Friday dealings, while the yield on the 10-year Treasury was at 4.245%, up from $4.129% Thursday afternoon.

The metal was still holding above $2,000, which is a key short-term support, Razaqzada said. “It needs to hold here to maintain its recent bullish bias.”

Friday’s fall in gold futures comes just days after prices touched their highest intraday level on record. Prices for the most-active contract climbed to an all-time high of $2,152.30 on Sunday evening, after settling on Dec. 1 at $2,089.20, the highest daily finish on record.

In light of Friday’s stronger data, “the market will be wondering whether they will hear any form of confirmation from the Fed that rate cuts could start at the end of Q1 or start of Q2 next year, after all,” said Razaqzada.

“Perhaps, the upcoming CPI report on Tuesday could determine how hawkish or dovish the Fed will be on Wednesday,” he said.

Officials from the U.S. central bank will conclude a two-day monetary policy meeting Wednesday. “That’s where gold investors’ focus will be next week,” Razaqzada said.