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Gold ends lower, sheds nearly 2% this week as taper bites

AP

Gold ended lower on Friday after U.S. jobs data beat forecasts, strengthening the case for the Federal Reserve to start reducing bond purchases as soon as this month.

Gold tumbled close to a five-month low immediately after U.S. data showed employers had hired more workers than expected in November and the unemployment rate had dropped to a five-year low of 7 percent.

When gold failed to drop to the five-month low, it began to rise on technical support. When the price got to $30 above the session low, gold trimmed gains.

Spot gold was last flat at $1,225 an ounce, off an earlier low of $1,211.80. U.S. gold futures for February delivery settled $2.90 lower at $1,229.00 an ounce, down 1.7 percent for the week.

Investors believe the nonfarm payrolls data has raised chances the Fed will start ratcheting back its bond-buying program sooner rather than later.

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"Now definitely a lot of people are thinking tapering, or even more aggressively tapering could be on the table,'' said Frank McGhee, head precious metals dealer at Chicago commodities brokerage Alliance Financial LLC. "The metals are in a state of flux until we have more certainty about what actions the Fed's going to take."

Investors now turn their focus on the Fed's December policy meeting on Dec. 17-18 to see if the U.S. central bank will decide when to trim its $85 billion monthly bond-buying program, which has underpinned gold's rise in recent years.

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—By Reuters