Bullion metals end mixed for the week

Weak job reports hammers the dollar thereby lifting gold prices

Gold prices ended higher on Friday, 07 November, 2008. Gold prices rose as dollar weakened. The rise in US unemployment figure weighed on the greenback on that day. Silver prices dropped on Friday.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. Losses in equity markets had also forced traders to sell gold. Since past couple of weeks, precious metals, mainly gold, had dropped as traders tried to gain back some of the money that had lost in other markets.

On Friday, Comex Gold for December delivery rose $2 (0.3%) to close at $734.2 an ounce on the New York Mercantile Exchange. Prices earlier rose to a high of $744.9. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (29.4%) since then. For the week, gold prices ended higher by 2.2%. For the month of October, gold ended lower by 18%. It was the biggest percentage loss for gold since February, 1983.

This year, gold prices have lost 11.6% till date. The dollar index has gained 9% this year. For the third quarter ended September, 2008, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%.

On Friday, Comex silver futures for December delivery fell by 9 cents (0.9%) to $9.963 an ounce. For the week, silver gained 2.3%. For the month of October, silver slipped by 20%. Till date, silver has lost 33% this year. Silver had ended month and quarter of September 2008 with a loss of 10%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. The metal also had gained for seven straight years.

At the currency market on Friday, the dollar weakened against the euro and the British pound after the Labor Department reported the U.S. economy lost 240,000 jobs in October.

The Labor Department reported on friday, 07 November, 2008 that the U.S. labor market has collapsed in the past three months, shedding 651,000 jobs and driving the unemployment rate to its highest point in more than 14 years.

U.S. nonfarm payrolls fell by 240,000 in October, worse than expected lifting the unemployment rate to 6.5% from 6.1%. The job losses and the unemployment rate were worse than expected. Over the first 10 months of 2008, 1.2 million jobs have been lost with over half of those losses coming in the past three months.

Payrolls losses in September were revised down sharply to 284,000, the largest job loss in seven years.

Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the latest move, the Federal Reserve has cuts its target bank lending rate to 1% from 5.25% in September, 2007. The Fed did it in eight steps.

Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.