Gold Trades Near 10-Month Low in London on Recovery Outlook

Gold traded near a 10-month low in London on mounting confidence the global economy is strengthening and as investors awaited U.S. jobs data. Silver was near its lowest since July.

A Labor Department report today will probably show U.S. payrolls increased in March, economists said. Gold is down 7.4 percent this year as global equities trade about 2 percent below a more than four-year high. Bullion is set for the biggest weekly drop in seven and is nearing a bear market even as the Bank of Japan (8301) yesterday increased bond purchases and European Central Bank President Mario Draghi warned that he sees risks to Europe’s recovery.

“The bearish market sentiment feels much more severe than the actual decline in prices,” Joni Teves, an analyst at UBS AG in London, wrote today in a report. “Today, the focus is on March U.S. nonfarm payrolls. The threat for gold is that a strong print would give enough ammunition to the market for another push lower. A significantly weaker-than-expected employment number could also spark a powerful upside response.”

Gold for immediate delivery lost 0.2 percent to $1,551.48 an ounce by 9:40 a.m. in London. It reached $1,540.29 yesterday, the lowest since May 30, and is down 3 percent this week. Futures for June delivery were little changed at $1,551 on the Comex in New York. Futures trading volume was 37 percent below the average in the past 100 days for this time of day, according to data compiled by Bloomberg.

Bullion slipped this year after 12 straight annual gains as Federal Reserve policy makers debated the pace of stimulus. A close at $1,520.18 in London would be a 20 percent drop from the peak reached in September 2011, the common definition of a bear market.

Jobs Data

Today’s nonfarm payrolls data may show U.S. employers hired a net 190,000 workers last month and the unemployment rate held at a four-year low of 7.7 percent, according to economists surveyed by Bloomberg. Payrolls rose 236,000 in February.

Silver for immediate delivery lost 0.3 percent to $26.8869 an ounce in London, after reaching $26.65 yesterday, the lowest since July 24. Prices entered a bear market this week and are down 11 percent this year. Palladium added 0.1 percent to $728.28 an ounce, after dropping to a more than four-week low of $722.73 yesterday. Platinum was 0.3 percent higher at $1,527.60 an ounce. It reached $1,509.60 yesterday, the lowest since August.

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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