A “pretty darn strong” US employment report is pretty darn bad for gold, it would appear. Bullion headed for the biggest weekly drop in a year after payrolls surged and wage growth accelerated in October, boosting the case for the Federal Reserve to raise interest rates.
Higher rates cut the appeal of the metal, because it doesn’t pay interest or give returns like assets such as bonds or equities.
Gold is on its way to a third straight weekly loss as signs of resilient US growth increase the chances that Fed officials will tighten monetary policy soon. Fed chief Janet Yellen said in a congressional hearing this week that a move on rates in December is a “live possibility” if economic data hold up.
The dollar jumped after the payrolls report.
“The Fed is determined to move, and now they have the fuel to do it,” said Mike McGlone, director of research at ETF Securities in New York. “That number was pretty darn strong, and there’s not much we can do about it. Higher yields, a strong dollar and Fed tightening are all bad for gold.”
Gold futures for December delivery fell 1.6pc to $1,086.80 an ounce on the Comex in New York on Friday. Prices are down 4.8pc on the week, heading for the biggest such loss since October 31, 2014. Call options on gold (giving owners right to buy December 2015 futures at $1,150 an ounce) fell 63pc.
The option was the most active on Friday morning, with 743 contracts trading. Put options climbed. Gold prices remain far off the all-time high reached in April 2011, when the precious metal touched $1,923 per ounce as the global economy wobbled.
The addition of 271,000 jobs exceeded all estimates in a Bloomberg survey of economists. The median forecast called for a 185,000 advance. Average hourly earnings climbed from a year earlier by the most since July 2009, the US government report showed on Friday.
Sibanye Gold Ltd (ADR) (NYSE:SBGL) fell -9.23% or -0.55 points on Friday and made its way into the losers of the day. After trading began at $5.59 the stock was seen hitting $5.62 as a peak level and $5.38 as the lowest level. The stock ended down at $5.41. The daily volume was measured at 1.59 million shares. The company has a market cap of $1.28 billion. The mean estimate for the short term price target for Sibanye Gold stands at $8.34 according to 3 Analysts. The higher price target estimate for the stock has been calculated at $9.48 while the lower price target estimate is at $6.56. On Feb 2, 2015, the shares registered one year high at $11.56 and the one year low was seen on Aug 27, 2015. The 50-Day Moving Average price is $5.99 and the 200 Day Moving Average price is recorded at $6.24. Sibanye Gold Ltd (ADR) (NYSE:SBGL) operates underground and surface gold operations in South Africa. The company holds interests in the Driefontein Operations covering an area of approximately 8,561 hectares; the Kloof Operations covering an area of approximately 20,100 hectares; and the Cooke Operations located in the West Witwatersrand region, as well as in the Beatrix Operations covering an area of approximately 16,821 hectares in the Free State province of South Africa.
Royal Gold Inc. USA) (NASDAQ:RGLD) witnessed a decline in the market cap on Friday as its shares dropped -11.80% or -4.75 points. After the session commenced at $39.10, the stock reached the higher end at $39.32 while it hit a low of $35.50. With the volume soaring to 2.62 million shares, the last trade was called at $35.51. The company has a 52-week high of $77.20. The company has a market cap of $2.32 billion and there are 65.26 million shares in outstanding. The 52-week low of the share price is $35.50. Royal Gold has dropped -29.23% during the last 3-month period. Year-to-Date the stock performance stands at -45.72%. The stock price is expected to reach $65.61 in the short term. The number of analysts agreeing with this consensus is 16. The higher estimate for the short term price target is at $79.00 while the lower estimate is at $52.00. On Jan 27, 2015, the shares registered one year high at $77.20 and the one year low was seen on Nov 6, 2015. The 50-Day Moving Average price is $48.38 and the 200 Day Moving Average price is recorded at $55.49. Royal Gold Inc. USA) (NASDAQ:RGLD) recorded the second consecutive quarter of record volume at 65,868 gold equivalent ounces (“GEOs”)1 in the first quarter of fiscal 2016 (ended September 30, 2015, “first quarter”), up 22% from the year-ago quarter. Revenue of $74.1 million reflected a 7% increase over the prior year quarter. Physical gold inventory held on the balance sheet and not reflected in revenue increased to 11,500 ounces during the first quarter, a 117% increase over the physical gold inventory of 5,300 ounces as of June 30, 2015.
Rubicon Minerals Corp. (USA) (NYSEMKT:RBY) traded down -16.72% during trading on Friday, hitting $0.15. The firm has a 50 day moving average of $0.54 and a 200-day moving average of $0.85. The stock has a market cap of $50.43 Million. Rubicon Minerals has dropped -83.72% during the last 3-month period. Year-to-Date the stock performance stands at -86.2%. The stock price is expected to reach $1.32 in the short term. The number of analysts agreeing with this consensus is 2. The higher estimate for the short term price target is at $1.40 while the lower estimate is at $1.25. On Jan 21, 2015, the shares registered one year high at $1.35 and the one year low was seen on Nov 6, 2015. Rubicon Minerals Corp. (USA) (NYSEMKT:RBY) announced it is moving to suspend underground activities at the Phoenix Gold Project (the “Project”) while it enhances its geological model of the F2 Gold Deposit and develops a project implementation plan. “We believe in the potential of the Phoenix Gold Project,” said Michael Winship, interim President and Chief Executive Officer of Rubicon. “We have high-grade gold mineralization with extensive infrastructure, in one of the top producing gold camps in the world. Similar to other high-grade, narrow-vein, underground gold deposits, the geology can be quite challenging and requires additional analysis to be fully understood.