Gold Prices Bleed on Jobs Report

Gold prices are losing ground Thursday on a better-than-expected jobs report.
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(Gold story updated to reflect price changes and commentary by George Gero, Senior Vice President-Financial Consultant, RBC Wealth Management)
NEW YORK (TheStreet) -- Gold prices lost ground Thursday on a better-than-expected jobs report.

Gold for December delivery was losing $21 to $1323.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Thursday has traded as high $1,349.60 and as low as $1,318.20.

The

U.S. dollar index

was up 0.4% to $77.44 while the euro was up 0.9% to $1.41 against the dollar. The spot gold price was down $23.70, according to Kitco's gold index.

Gold prices were falling Thursday after some recovery on Wednesday from speculative trading, dollar advances and worries that an unexpected rate hike in China would limit demand for the yellow metal.

"The only thing I see right now is that jobs came in a little better than expected," said EverBank World Markets' Mike Meyer in explaining the lower gold prices Thursday. "So it's still a matter of the whole global growth picture where we don't have a need for flight to safety -- in this case, gold -- when the global growth picture is brightening."

"With better-than expected jobs, the flight to safety just isn't there."

Initial weekly claims declined by 23,000 to 452,000 in the week ended Oct. 16, from the week before. However, the extent of the decline was amplified by the Labor Department's upward revision of the previous week's figure to 475,000 from 462,000. Analysts on average predicted that initial claims would fall by 7,000 to 452,000, according to

Briefing.com.

Next week, gold observers will be paying close attention to a number of major gold price indicators, including existing home sales figures, consumer confidence figures and the home price index.

While many gold observers have been watching for gold's ascent to $1,400, Meyer said he won't be making any firm predictions until after the Fed provides a clearer picture of what type of quantitative easing it will put in place. The Fed's next FOMC meeting is in early November.

Meanwhile, RBC Wealth Management's senior vice president-financial consultant George Gero attributed recent yellow metal price direction to fund activity: "Sell stops by momentum funds generated almost every $10 down in gold; dragged precious metals markets lower as asset allocators looked at other commodities such as grains, softs and industrials."

Gold open interest

was down 8,000 in a few days, probably down more today as lower volume, lower close brought sellers back. Silver open interest

was also lower and platinum and palladium are all looking forward to new ETF products due shortly, that may be helping slow sellers down."

Kitco News

also quoted Anne-Laure Tremblay of BNP Paribas as saying that gold prices may have "overshot" relative to the likely results of possible Fed quantitative easing in early November. Furthermore, she said that China's unexpected rate hike on Oct. 19 in response to demands for a stronger yuan could mean that the Fed could temper its position to "reassure U.S. bond investors."

Separately, John Doody of

goldstockanalyst.com

said the recent gold price fluctuations have been "trivial." He said that recent moves are relatively insignificant in the context of $1,300 gold. What's more important he said, is to look at the long-term picture, which he believes shows that gold will definitely advance higher.

"We've got a federal reserve that's committed to trying to stimulate the economy because there's no new fiscal policy coming, and Republicans are going to prevent that, so all the heavy lifting's got to be done by the Fed, and the Fed is basically going to scare us into thinking that inflation is coming."

Silver prices

were down 70 cents to $23.16, while copper was flat at $3.78.

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Gold mining stocks

, a risky but profitable way to

buy gold

were in the red Thursday afternoon.

Kinross Gold

(KGC) - Get Report

was down 3.8% to $17.46, while

Newmont Mining

(NEM) - Get Report

was falling 2.4% to $59.04.

Goldcorp

(GG)

was down by 1.8% to $41.68 and

SPDR Gold Trust

(GLD) - Get Report

was falling 1.5% to $129.31.

-- Written by Andrea Tse in New York.

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