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Gold down on stronger than expected jobs report

Xinhua, August 6, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Friday as the U.S. jobs report came in better-than-expected.

The most active gold contract for December delivery fell 23 U.S. dollars, or 1.68 percent, to settle at 1,344.40 dollars per ounce.

Gold was put under extensive pressure as the U.S. Department of Labor released its big jobs report, the Employment Situation report on Friday, showing nonfarm payrolls increasing by 255,000 during the month of July, keeping the unemployment rate at 4.9 percent.

Analysts note that this report was much better than expected and includes a 5,000 upward revision to the June figures. The labor force participation rate increased by 0.1 to 62.8 percent which shows that more people are starting to work, and is also a sign of strength, giving investors the confidence to move away from gold's safe haven properties and into more lucrative interest-bearing assets like equities.

The precious metal was put under further pressure as the U.S. Dollar Index also rose by 0.49 percent to 96.25 as of 17:00 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

U.S. equities also put pressure on the precious metal as the U.S. Dow Jones Industrial Average rose by 158.42, or 0.86 percent as of 17:00 GMT. Analysts note that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven, while the opposite is true when U.S. equities post gains.

A report released by the U.S. Department of Commerce also put pressure on gold as it showed increased demand, despite a widening trade gap. The report shows the trade balance level at negative 44.5 billion U.S. dollars, which is an larger-than-expected increase over the previous level, but many analysts believe that the increased demand is a sign of a strengthening economy.

Silver for September delivery fell 62.6 cents, or 3.06 percent, to close at 19.817 dollars per ounce. Platinum for October delivery dropped 13.5 dollars,or 1.16 percent, to close at 1,151.5 dollars per ounce. Endit