US MIDDAY: gold plummets

New York gold futures fell sharply early on Friday as crude oil prices tumbled and after a robust US jobs report lowered the chance of a large cut in key interest rates by the Federal Reserve next week.
Even though a dollar bounce this week has weighed on bullion, the long-term outlook of gold remained bullish based on a steadily weakening US currency, analysts said.
"Gold has been following oil. Also with the (job) numbers that came out, it shows the economy is fairly strong, and the chances of the Fed cut of 50 basis points is diminishing. Now people are thinking it's only going to be a quarter point," said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois.
US employers added 94,000 jobs in November, the government said in a report underlining a slowdown in job creation in recent months that raises chances for a modest cut in interest rates next week.
The Fed is expected to cut US rates by 25 to 50 basis points next Tuesday. An interest rate cut lowers the cost of borrowing and makes bullion more attractive compared with fixed-income investments.
The February contract initially jumped and hit a session high of $811.10 after the payrolls report as the dollar lost ground versus the euro, but early gains soon fizzled as the crude oil losses accelerated.
Falling energy prices dented gold's appeal as a hedge against oil-led inflation. This week, gold futures have been largely trading in a wide range between $790 and $810, weighed by a recovering US dollar and a volatile energy market.
Spot gold was quoted at $792.85/793.55 an ounce, compared with $803.20/803.90 in New York Thursday afternoon. London bullion dealers fixed the afternoon spot reference price at $792.50.
Comex March silver was down 13.50 at $14.490 an ounce, trading between $14.395 and $14.705. Spot silver was quoted at $14.32/14.37 an ounce, compared with $14.45/14.50 late Thursday in New York. London silver was fixed at $14.44. Nymex January platinum was down $10.30 at $1,459.90 an ounce. Spot platinum was quoted at $1,455/1,460. March palladium fell $3.80 or 1 percent to $347.90 an ounce. Spot palladium fetched $345.50/348.50.