On Friday, gold (NYSEARCA:GLD) futures for December — the most active contract — dropped $23.90 to close at $1,284.60 per ounce, while silver (NYSEARCA:SLV) futures fell 34 cents lower to finish at $21.32. Major exchange-traded funds, like the SPDR Gold Trust and iShares Silver Trust, also closed in negative territory.
Gold and silver both declined as the latest jobs report from the Department of Labor revealed the economy added a net 204,000 jobs in October, easily beating expectations of only 120,000 jobs. Even more encouragingly, the September gain was upwardly revised to 163,000 from 148,000, and August’s payroll additions were upwardly revised to 238,000 from 193,000. The improved employment situation has once again ignited speculation that the Federal Reserve could dial down its bond purchases before the end of this year.
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“Markets are taking the news as a sign that the Federal Reserve will begin to taper QE3 sooner than later — perhaps December given labor conditions bucking expectations,” explained Christopher Vecchio, currency analyst at DailyFX. “U.S. Treasury yields have surged on the day, and are acting in a manner indicative of rising taper expectations: the middle or “belly” of the yield curve is seeing yields increase the fastest.”
However, the unemployment rate edged higher to 7.3 percent in October from 7.2 percent in September. Currently, the Federal Reserve would like to see the unemployment rate fall to at least 6.5 percent before reversing its zero interest rate policy. The U-6 unemployment rate, which includes everyone in the headline rate, plus people who are either employed part-time but prefer a full-time position, or want work but have stopped looking, increased from 13.6 percent to 13.8 percent — its highest level since July.
By the end of the trading day, shares of the SPDR Gold Trust (NYSEARCA:GLD) dropped 1.5 percent, while the iShares Silver Trust (NYSEARCA:SLV) declined 0.70 percent. However, gold miners (NYSEARCA:GDX) Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) both managed modest gains of 0.20 percent and 0.80 percent, respectively. Shares of First Majestic Silver (NYSE:AG) jumped 1.5 percent.
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Disclosure: Long EXK, AG, HL, PHYS