Gold Ends Lower After Strong U.S. Jobs Data; Sheds 1.8% For Week

(RTTNews) - Gold futures slipped for a third consecutive day to end lower on Friday, after some strong U.S. jobs data with a stronger than expected growth in May, fueling concerns of a possible rate hike by the Federal Reserve sooner than later. The precious metal was also under pressure after the International Monetary Fund's cut its U.S. growth forecast for the year.

Gold futures shed about 1.8 percent for the week.

Markets in the United States were under pressure after the much stronger than expected job growth in May raised concerns about the outlook for interest rates. The strength of the report had investors wondering if a rate increase could be announced as soon as this month. Others seem more confident that an increase will occur in September.

Prices slipped to a 5-week low yesterday after the IMF cut its forecast for U.S. economic growth, while predicting some tame inflation. When combined with dollar appreciation, falling global prices of tradable goods, and cheaper energy costs, the IMF said core consumer price inflation is expected to fall to 1.2 percent by the end of September.

The IMF said inflation should start rising later in the year but will not reach the Fed's 2 percent medium-term objective until mid-2017. The lender subsequently said the Fed should defer its first increase in interest rates until there are greater signs of wage or price inflation.

Meanwhile, hopes for a deal to solve the Greek debt crisis also diminished gold's safety appeal. Prime minister Alexis Tsipras on Thursday delayed the repayment of EUR 300 million to the IMF after deciding to combine four separate payments into one, to be repaid at the end of June.

Gold for August delivery, the most actively traded contract, dropped $7.10 or 0.6 percent to settle at $1,168.10 an ounce, on the Comex division of the New York Mercantile Exchange on Friday.

Gold for August delivery scaled an intraday high of $1,178.00 and a low of $1,162.10 an ounce.

On Thursday, gold prices dropped $9.70 or 0.8 percent to settle at $1,175.20 an ounce, after initial claims for unemployment benefits in the U.S. declined more than expected last week.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 709.89 tons from its previous close of 715.86 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.31 on Thursday, up from its previous close of 95.58 on Thursday in late North American trade. The dollar scaled a high of 96.91 intraday and a low of 95.36.

The euro trended lower against the dollar at $1.1121 on Friday, as compared to its previous close of $1.1237 in North American trade late Thursday. The euro scaled a high of $1.1286 intraday and a low of $1.1052.

On the economic front, employment in the U.S. increased much more than anticipated in May, a report from the Labor Department showed Friday. Non-farm payroll employment jumped by 280,000 jobs in May compared to economist estimates for an increase of about 225,000 jobs.

While the increase in employment in April was downwardly revised to 221,000 jobs from 223,000 jobs, the employment growth in March was upwardly revised to 119,000 jobs from 85,000 jobs.

However, the report also showed that the unemployment rate inched up to 5.5 percent in May from a near seven-year low of 5.4 percent in April. The increase came as a surprise to economists, who had expected the unemployment rate to remain unchanged, but the uptick primarily reflected an increase in the size of the labor force.

In Europe, Germany's factory order growth exceeded expectations in April helped by foreign demand, data from Destatis revealed Friday. Factory orders increased 1.4 percent month-on-month, faster than the 1.1 percent growth in March and a 0.5 percent rise forecast by economists. It was also the fastest growth since December, when it rose 3.3 percent.

France' foreign trade deficit decreased more-than-expected in April, as exports rose and imports fell, figures from the Customs Office showed Friday. The trade deficit declined to EUR 3.0 billion in April from EUR 4.4 billion in the previous month. Economists had expected a shortfall of EUR 3.95 billion.

The leading index for Japan, which measures the future economic activity, increased as expected in April, preliminary figures from the Cabinet Office showed Friday. The index rose to 107.2 in April from 106.0 in the previous month. This is the second consecutive rise for the index and in line with economists' expectations.

Meanwhile, Japan's foreign reserves decreased in May on lower currency reserves and special drawing rights. The country's foreign reserve assets declined to $1.246 trillion as of May 31, 2015 from $1.250 trillion at April end. At the end of May 2014, the reserves were at $1.284 trillion.