Metals Stocks: Gold pulls back from 5-week high but aims for weekly gain

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Gold futures swung between small losses and gains Friday morning but were facing a weekly gain, as a closely watched report on U.S. employment came in better than expected, perhaps affirming the perception that the Federal Reserve will likely hold off on further rate cuts after delivering its third consecutive interest-rate reduction on Wednesday.

However, weakness in manufacturing activity and lower bond yields were capping gold’s slide.

Gold for December delivery GCZ19, -0.32%  on Comex fell $1, or less than 0.1%, at $1,513.80 an ounce, after gaining 1.2% on Thursday, marking the highest most-active contract finish since Sept. 26 and largest one-day dollar and percentage climb since Oct. 2.

For the week, the precious metal is looking on at 0.4% advance.

December silver SIZ19, -0.37%  was little changed at $18.075 an ounce after gold’s sister metal rose 1.1%, for its first settlement above $18 since Sept. 25. For the week, silver has gained 0.6% thus far.

The U.S. created 128,000 new jobs in October, with hiring stronger at the end of summer than previously reported, easily topping the 75,000 forecast of economists surveyed by MarketWatch and suggesting the economy is still holding up better than expected despite trade turbulence and a slowdown in global growth.

On top of that, gains for previous months were raised. The government lifted the increase in new jobs in September to 180,000 from 136,000 and August’s gain were raised to 219,000 from 168,000.

The upbeat report is a negative for gold that has prospered on the prospect of a weakening economic outlook in the U.S. and elsewhere in the world. Prices for precious metals also have enjoyed gains amid doubts about the U.S.’s ability to secure a substantial trade resolution with China.

A news report that said China officials have doubts over prospects for a long-term trade deal with the U.S. fed declines in U.S. stocks and haven demand for gold.

However, Fawad Razaqzada, technical analyst at the, said that commodity traders will need more than just one month of data to chill gold buying.

“I don’t think it’s a game changer by any means,” Razaqzada said. The jobs report, although it was good, we need several months of data to convince the Fed[ not to cut interest rates,” he said.

Gold’s early decline softened Friday, bouncing into positive territory, after a report on manufacturing. The Institute for Supply Management said its manufacturing index fell to 47.8% last month from 49.1%, marking the lowest level since June 2009. American manufacturers posted the biggest contraction in September since the end of the 2007-09 recession, reflecting a slowdown in the U.S. and global economies made worse by a tense trade war with China.

Meanwhile, outlays for U.S. construction projects rose 0.5% in September at a seasonally adjusted annual rate of $1.29 trillion, the Commerce Department reported Friday. Economists polled by MarketWatch had expected growth of 0.3%.

Razaqzada said that yields for government debt, perceived as another haven asset along with gold, have held lower and that has helped to mitigate gold’s decline because rising yields for sovereign paper tend to compete with gold and undercut appetite for bonds. The 10-year benchmark Treasury yield TMUBMUSD10Y, +1.34%, for example, is at 1.70%, compared with 1.80% last Friday. Bond yields fall as prices rise.

In other metals trade, January platinum PLF20, +0.92% gained $8.90, or 0.9%, to trade at $942.60 an ounce, while December palladium PAZ19, +1.09% rose $21.90, or 1.3%, to $1,777.50 an ounce.

December copper HGZ19, +0.27%  added a penny, or 0.4%, to $2.649 a pound.