Gold and silver prices sank lunchtime Friday in London after new U.S. jobs data beat Wall Street forecasts with the strongest annual run of net hiring since the Tech Stock Bubble peaked in March 2000.
Commodities dropped, and U.S. stock-market futures pointed lower as U.S. bond prices fell, driving 10-year yields almost 0.1 percentage higher to a ten-week high of 2.21%.
Today's Non-Farm Payrolls report estimated net U.S. hiring at 295,000 last month, beating analyst forecasts for the 9th time in 12 months.
Both gold and silver prices dropped back to the New Year's starting levels, erasing the last of 2015's earlier 10% and 17% gains.
"A quiet morning gave way to an aggressive sell-off in gold" on the NFP data, says one London trading desk, "with silver in a similar state of freefall."
"Robust [jobs] figures are likely to fuel expectations of interest rate hikes," says the commodities team at Commerzbank in Germany, "and put pressure on the gold price in U.S.D."
"The U.S. Dollar is in a multi-year ascent and U.S. interest rates will move higher, not lower," says a note on precious metals prices from Dutch bank ABN Amro.
"[But] financial markets continue to underestimate Fed rates hikes this year and next... Combined with constructive investor sentiment [on stocks] this is a major negative for gold prices."
"The extent of Fed rate hikes over the next few years," agrees Standard Bank FX strategist Steven Barrow, "are more likely to mimic the Fed's own, higher forecasts than the lower rates priced into the futures strip right now."
[Read: Study: Long-Term Rise in the Dollar Does Not Bode Well for Gold]
"There is very little doubt among analysts and gold observers that the Dollar and gold tend to move inversely," said Dundee Wealth's Martin Murenbeeld, speaking in Toronto on Monday at the annual PDAC mining conference – an event marked this year by "far less prime rib, more chips and salsa" as executives slash corporate expense accounts according to one attendee.
"That weighs on gold."
Having dipped earlier below what analysts this week called 'key support' at $1195 per ounce, gold prices fell 1.1% inside 6 minutes on today's U.S. jobs data.
Silver prices fell less steeply having already dropped below $16 per ounce, but extended their loss for the week to 4.7% in Dollar terms.
Dropping again to trade below $1183 – the crash low of 2013 – gold neared the close London business 2.9% down from last Friday.
Gold priced in Euros, in contrast, held flat for the week however at €1083 per ounce, as the single currency sank to new 11.5-year lows beneath $1.09 against the Dollar.
"Investors are transfixed by when the Fed will tighten rates," wrote French investment bank Societe Generale's strategist Albert Edwards last week, "and can’t see the wood for the trees.
"The Fed’s focus on payrolls, a lagging indicator, is most perplexing...The reality is that the vast bulk of economic, as well as earnings data (even outside the energy sector) has been simply dreadful."
