Gold Prices Plummet $40 on Good Jobs Report

NEW YORK ( TheStreet) -- Gold prices plummeted Friday after investors fled from the yellow metal on a better-than-expected jobs report.

Gold for December delivery dropped $40.30, one of its largest drops in 2012, to close at $1,675.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,717.20 and as low as $1,676.40 an ounce, while the spot price was sinking $38.30, according to Kitco's gold index.

"Unexpected good jobs figures, fears for less stimulus spending coming quickly moved investors to take money off the table," George Gero, precious metals strategist at RBC Wealth Management, wrote in a Friday afternoon note. "Next week we could see margin selling and some more weakness until we see stabilization."

Nonfarm payrolls in October rose 171,000 as the unemployment rate ticked slightly higher to 7.9% from the prior month's 7.8%. The unemployment rate was in line with expectations, according to, but above the forecast for 125,000 new jobs.

The positive jobs number saw the dollar index leap, and the euro weaken.

Silver prices for December delivery sank $1.39 to settle at $30.86 an ounce, while the U.S. dollar index was jumping 0.56% to $80.49.

Eurozone finance ministers continued to weigh the fate of Greece's austerity measures, as two members of Athens' Socialist party quit on Thursday. The move suggested more dissent on austerity among the ruling parties.

Spain continued another week without a requesting a formal bailout from the European Central Bank.

The inaction in Europe will hang over meetings in Mexico City on Sunday when the G20 finance ministers and central bank governors convene to discuss the future of the eurozone.

Jon Nadler, senior analyst for Kitco Metals, noted that low physical demand in consumer markets also continued to push prices down.

"We will hardly hear from anyone about waning jewelry demand in key consuming markets and about U.S. gold dealers reporting 40% to 50% slower business compared to last year before the peak," Nadler wrote in a note.

With the greenback soaring, U.S. economic indicators improving, lack of stimulus action in Europe and a dip in physical demand in place like India, it's difficult for gold investors to get an immediate sense of what the new trading range may be, especially as gold has crashed through a previous psychological bottom of $1,700 an ounce.

Gold mining stocks were mostly lower Friday. Shares of Newmont Mining ( NEM) were shedding 6.7%, while shares of Agnico-Eagle Mines ( AEM) were dropping 6.1%.

Among other mining stocks, Barrick Gold ( ABX) was off 2.3%, and Yamana Gold ( AUY) was losing 4.6%.

Gold ETF SPDR Gold Trust ( GLD) was down 2.2%.

-- Written by Joe Deaux in New York.

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