(Kitco News) – Gold prices dropped sharply in the immediate aftermath of a U.S. employment report for June that showed better-than-expected jobs growth, including upward revisions for jobs in April and May. The U.S. dollar index pushed to a three-year high on the jobs data, which also helped sink the gold and silver markets.
August gold was last down $32.10 at $1,219.80 an ounce. Spot gold was last quoted down $31.60 at $1,221.40. September Comex silver last traded down $0.679 at $19.01 an ounce.
The U.S. Labor Department reported non-farm payrolls increased by 195,000 in June, which was significantly better than the 160,000 rise expected by the market place. The overall unemployment rate was unchanged from May, at 7.6%. The upward non-farm job revisions in April and May totaled around 70,000 for both.
The improving U.S. labor market lent additional weight to the hawkish camp of Fed watchers who think the Federal Reserve will start to back off on its quantitative easing of monetary policy (so-called “tapering”) as soon as later this year. That is seen as at least initially commodity-market bearish, including the precious metals. The very easy money policies of the major central banks of the world have boosted raw commodity prices in recent years.
The market place is also anxiously watching developments in Egypt. Crude oil prices have risen Friday on news that a state of emergency has been declared in the Suez and South Sinai provinces of Egypt. Reports said there was an Islamist attack at the Arish Airport. While reports said the Suez Canal is operating normally, any disruption of one of the world’s most important major world waterways would be very market-sensitive.
Earlier this week the Egyptian military overthrew the sitting president and installed its own temporary leader. Any escalation of violence in Egypt or the Middle East could prompt fresh safe-haven demand for gold.
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