Gold futures were down $25 U.S. Friday morning, falling below the $1,200 U.S. level for the first time in two days, after stronger-than-expected U.S. employment data spurred a strengthening in the dollar.
Gold has hit a string of record highs in recent weeks, largely taking its cue from weakness in the dollar, as investors have been buying gold, other commodities and higher-yielding currencies in a bid to diversify out of the dollar.
In recent trading, benchmark February gold was down $24.90 U.S. at $1,193.40 U.S. an ounce while thinly traded nearby December gold was off $23.50 U.S. at $1,193.90 U.S. on the Comex division of the New York Mercantile Exchange. The ICE Futures U.S. Dollar Index was up 0.596 point at 75.227 points.
Some market participants have expressed concern that gold -- which has gained ground in 21 of the past 23 sessions -- could suffer a major decline if the dollar shows a sustained recovery.
That said, the dollar isn't expected to strengthen meaningfully until the economy shows clearer signs of recovery and the Federal Reserve raises interest rates from near-zero levels, which isn't generally expected until at least well into next year.
Data released Friday by the Labor Department provided indications that the jobs market is finally starting to heal, as job losses slowed sharply in November and the unemployment rate unexpectedly declined. Nonfarm payrolls fell by 11,000 last month, compared with a downwardly revised 111,000 drop in October, the Labor Department said Friday.
The unemployment rate edged down to 10% in November from 10.2%.
Gold initially hesitated after the payrolls data as other commodities, like copper and oil, ticked higher, according to several experts
The metal then began to come off sharply as the U.S. dollar gained ground.
With the year-end approaching, funds and individual traders are looking to capitalize on gold's gains for the month and year. Even with Friday morning's fall, it's up some 35% on the year.
