Gold tumbles as dollar surges after positive data

By Moming Zhou & Polya Lesova, MarketWatch

NEW YORK (MarketWatch) -- Gold futures tumbled 4% Friday, sustaining their first major loss in a run that began early in November, as the U.S. dollar rose sharply after an upbeat U.S. jobs report.

On the Comex division of the New York Mercantile Exchange, gold for December delivery fell $48.60 to end at $1,168.80 an ounce.

Friday's losses erased gold's weekly gain. The benchmark contract ended the week down 0.5%, falling for the first week in the past five.

The dollar advanced after the Labor Department reported the U.S. labor market improved markedly in November, with the unemployment rate falling back to 10%.

Gold has tended to fall when the dollar rises, as the greenback's weakness gives investors more reason to buy hard assets as an currency alternative that will hold value when paper currencies depreciate. Read more on dollar's jump.

"The pullback is related to the dollar reaction to the jobs data," said James Steel, gold analyst at HSBC in New York.

"The euro/dollar has fallen back below $1.50, which is a rather important level," Steel said. "It has reduced the near-term currency hedge buying in the gold market."
Job Losses Slow, Employment Outlook Turning

The U.S. economy lost the fewest jobs since December 2007 in November and the unemployment report dropped to 10%. The report suggests recessions's worst job losses may be in the past. (Dec. 4)

The Labor Department also reported that nonfarm payrolls dropped by a seasonally adjusted 11,000 in November, the fewest since December 2007. Read more on November employment.

The report was much better than expected by economists surveyed by MarketWatch, who were looking for 100,000 fewer jobs and a steady 10.2% unemployment rate.