Gold drops most since May

Gold futures (COMEX:GCQ14) fell the most in five weeks after the U.S. added more jobs last month than forecast, curbing demand for a haven asset.

The addition of 288,000 jobs followed a 224,000 gain in the prior month, Labor Department figures showed today. The median forecast in a Bloomberg survey of economists called for a 215,000 advance. U.S. equities climbed to a record.

Gold through yesterday advanced 11 percent this year as the Federal Reserve said it will keep interest rates low for a considerable time after ending bond purchases, while unrest in Iraq and Ukraine spurred demand for a haven. The metal plunged 28 percent in 2013, the most in three decades, as the U.S. economy gained traction.

“The job numbers are telling us that the economy is healthy, and people don’t need a lot of safe haven going forward,” Alfonso Esparza, a senior currency analyst in Toronto at Oanda Corp., said in a telephone interview. “Gold will probably now start weakening again.”

On the Comex in New York, gold futures for August delivery fell 0.9 percent to $1,319.30 an ounce at 10:04 a.m. A close at that price would mark the biggest drop for a most-active contract since May 27. On July 1, the metal reached $1,334.90, the highest since March 24.

Trading was 21 percent more that the average for the past 100 days for this time, data compiled by Bloomberg show.

Jobs recovery

Gold climbed 70 percent from December 2008 to June 2011 as the central bank bought debt and held borrowing costs near zero percent to bolster the economy.

The metal last year ended a 12-year bull run amid an equity rally to a record and concern the Fed would taper bond buying.

The central bank trimmed purchases for a fifth consecutive time, to $35 billion, at its June meeting. Rising home and equity prices and an improving global economy should help stoke above-trend growth in the U.S., Fed Chair Janet Yellen said on June 18.

“Today’s jobs data was a very good indicator that the economy is healing,” Chris Gaffney, the senior market strategist at EverBank Wealth Management in St. Louis, said in a telephone interview. “Gold will suffer as people think that the chances of the Fed considering raising interest rates has increased.”

Silver futures for September delivery dropped 0.7 percent to $21.145 an ounce on the Comex. Yesterday, the price reached $21.335, the highest since March 17.

Palladium rally

On the New York Mercantile Exchange, palladium futures for September delivery rose 0.8 percent to $864 an ounce. Earlier, the metal reached $867.45, the highest since Feb. 23, 2001. The price headed for the ninth straight gain, extending the longest rally since Sept. 14, 2012.

In South Africa, 220,000 workers in the steel and engineering industry started an indefinite strike two days ago, a week after platinum mineworkers ended a five-month walkout. The country is the top producer of platinum and the second- largest for palladium, trailing Russia.

Platinum futures for October delivery fell 0.2 percent to $1,508 an ounce on the Nymex. Yesterday, the price reached $1,523, the highest since Sept. 4.

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