Gold Settles Lower After Jobs Report, Sheds 1.1% For Week

(RTTNews) - Gold futures ended lower for a third straight session Friday, after some soft U.S. jobs data provided little cues to a likely interest rate hike in September by the Federal Reserve. The dip in gold prices comes even as the dollar trended lower against a basket of some major currencies after the unemployment data.

For the week, gold futures shed about 1.1 percent.

While the Labor Department's report on Friday showed a much weaker than expected U.S. job growth in August, the unemployment rate still dropped to a new seven-year low. The economy generated only 173,000 jobs last month, but the unemployment rate dipped to 5.1 percent.

Minutes after the lackluster jobs data, gold made some gains reflecting confusion over when the Federal Reserve will hie interest rates.

That leaves the Fed with a dilemma. Some members want to hike rates next week despite Chinese headwinds and risks to the U.S. recovery, while other are urging rates stay at zero for now.

Jeffrey Lacker, president of the Richmond Fed, wants to raise interest rates no matter what the August jobs report tells us. "I am not arguing that the economy is perfect, but nor is it on the ropes, requiring zero interest rates to get it back into the ring," Lacker said in a speech in Richmond Friday.

Gold for December delivery, the most actively traded contract, dropped $3.10 or 0.3 percent, to settle at $1,121.40 an ounce, on the Comex division of the New York Mercantile Exchange on Friday.

Gold for December delivery scaled an intraday high of $1,133.10 and a low of $1,115.70 an ounce.

On Thursday, gold prices for December delivery dropped $9.10 or 0.8 percent, to settle at $1,124.50 an ounce, as the uptick in global stock markets lured investors to riskier assets, limiting the safe haven appeal of the precious metal with little support from a strengthening U.S. dollar.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 682.59 tons on Friday from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.12 on Friday, down from its previous close of 96.40 in late North American trade on Thursday. The dollar scaled a high of 96.58 intraday and a low of 95.97.

The euro trended higher against the dollar at $1.1161 on Friday, as compared to its previous close of $1.1124 in North American trade late Thursday. The euro scaled a high of $1.1191 intraday and a low of $1.1091.

On the economic front, the Labor Department said non-farm payroll employment climbed by 173,000 jobs in August, but well below the increase of 220,000 jobs anticipated by economists. Meanwhile, unemployment rate edged down to 5.1 percent in August from 5.3 percent in July, while economists expected the rate to dip to 5.2 percent.

Germany's factory orders declined at the fastest pace in six months in July, data from Destatis revealed Friday. Factory orders dropped 1.4 percent in July from the previous month, which was the biggest fall since January when it slid 2.6 percent.

Economists had forecast orders to fall at a slower pace of 0.6 percent. Orders had increased 1.8 percent in June and decreased 0.3 percent in May.

Germany's construction activity expanded at the slowest pace in seven months in August, data from Markit showed Friday. The seasonally adjusted Purchasing Managers' Index fell to 50.3 in August from 50.6 in July. This was the least marked increase in seven months.

French consumer confidence held steady in August, defying economists' expectations for an increase, figures from the statistical office INSEE showed Friday. The consumer confidence index came in at 93.0 in August, the same reading as in July. Economists had expected the index to rise to 94.0.