* Gold tumbles after U.S. jobs fall 533,000 in November
* Oil drops sharply, teeters just above $40 per barrel
* Futures end week over 8 percent lower
(Recasts, updates with quotes, closing prices, market
activity, adds byline and NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Dec 5 (Reuters) - Gold fell sharply to
close just above $750 an ounce on Friday as a bleak U.S. job
report led to a higher dollar, triggering wholesale liquidation
across the board from stocks to oil and commodities.
A U.S. government report showed that employers axed
payrolls by 533,000 jobs in November, the most in 34 years and
far more than expected, and the unemployment rate rose to 6.7
percent. []
"The financial market may be headed for another major
downward leg. If that happens, gold may be dragged down with
other financial assets," said Jeffrey Christian, managing
director at commodities research firm CPM Group.
U.S. stock markets turned more than 2 percent higher in
late trade after initially falling as much as 3 percent on
mounting recession worries. []
"When stocks enter one of those sharp declines, people
liquidate their gold because they need cash," Christian said.
Spot gold <XAU=> ended at $755.25 at 2:00 p.m. EST (1900
GMT), down 1.4 percent from Thursday's close of $765.70.
U.S. gold futures for February delivery <GCG9> settled down
$13.30, or 1.7 percent, at $752.20 an ounce on the COMEX
division of the New York Mercantile Exchange.
Futures ended the week more than 8 percent lower compared
with last Friday's settlement of $819 an once.
"(The job data) shows a worsening economic situation, and
it is hard for assets to maintain value against that," said
John Meyer, an analyst at Fairfax investment bank.
The other main external driver of gold, crude oil, also
weighed on the precious metal, as prices nearly sank below $40
per barrel. []
Sharp falls in the crude price this week have sent oil down
to a near four-year low. Weaker oil prices can undermine
interest in commodities as an asset class, analysts say.
"Gold has actually held up relatively well compared to
other commodities or financial assets. It has fallen sharply
but not nearly as sharply as other things," Christian said.
DEFLATION EYED
Interest in gold is being limited by expectations inflation
will fall after sharp drops in the price of many raw materials
such as crude oil and industrial metals.
Oil prices have shed more than $100 a barrel since they hit
an all-time high of $147.27 a barrel in July, while prices of
copper, aluminum and tin have also declined sharply.
"Mounting fears over the impact that a potential period of
deflation may have on prices appear to be weighing on
sentiment," said Standard Bank analyst Leon Westgate in a
note.
Among other precious metals, silver <XAG=> fell along with
gold and was at $9.43, which was 0.4 percent lower than its
Thursday close of $9.46.
Platinum and palladium have come under pressure from a
spate of bad news from the global auto market.
China posted its third monthly fall in car sales this year
in November, official data showed on Friday, setting the stage
for a possible double-digit decline in 2009 despite government
efforts to pump up consumer confidence. []
Spot platinum <XPT=> was at $778.50 an ounce, down 1
percent from its previous finish of $786.50 an ounce late on
Thursday. Spot palladium <XPD=> was at $160.00, which was 3.9
percent lower than Thursday's late quote of $166.50.
(Reporting by Frank Tang; Editing by Christian Wiessner)
