Gold falls as jobs report not as bad as feared

NEW YORK (MarketWatch) -- Gold futures fell Friday, extending weekly losses to 3%, after a less-grim-than-feared March jobs report sustained optimism over a global economic recovery, which has curbed demand for safe assets.

The U.S. economy lost 663,000 jobs in March, fewer than the 688,000 that analysts surveyed by MarketWatch had expected. The unemployment rate rose to 8.5%, in line with expectations. See Economic Report on jobless data.

Gold for April delivery fell $11.80, or 1.3%, to end at $895.60 an ounce on the Comex division of the New York Mercantile Exchange. It fell to as low as $894.70 earlier. The more active June contract fell 1.3% to close at $897.30.

Investors were "factoring in the idea that the [jobs] numbers are not as bad as expected," said Jon Nadler, senior analysts at Kitco Bullion Dealers. People were also expecting the Group of 20 nations meeting will "pull the economy out of its downward economic spiral."

Though the monthly job headline number was better than expected, total job losses were still ugly. The U.S. economy lost 5.1 million jobs since the recession began. January's revised job loss of 741,000 was the worst since 1949. In February, 651,000 jobs were lost.

Gold's decline on Friday came after its losses in the previous session. The metal fell 2% Thursday amid optimism that G20 steps to support the global economy would succeed.

Adding to the bearish gold tone, the G20 said it endorses 403 tons of gold sales by the International Monetary Fund. The proceeds will be used to provide finance for the poorest countries over the next two to three years. See full story on IMF gold sales.

In the long term, however, the IMF sales are not expected to have significant impact in gold markets, Morgan Stanley analysts said.

"Do not believe that this presents a strong negative risk to gold prices -- as it [the gold sale] will be 'orderly' and maybe even off market," the analysts said in a note to clients.