PRECIOUS-Gold slides, ends tad above $750 on job data

* 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)

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. [ID:nN05431090]

“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. [.N]

“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. [O/R]

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.


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. [ID:nSHA314290]

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)