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Gold Falls as Dollar Jumps to Three-Year High on Jobs

Gold futures fell to a one-week low as the dollar surged to the highest in almost three years after U.S. payrolls rose more than forecast in June, fueling speculation that the Federal Reserve will scale back stimulus.

The greenback climbed as much as 1.6 percent against a basket of major currencies, eroding the appeal of gold as an alternative investment. Payrolls rose by 195,000 workers for a second straight month, the government said today. The median forecast in a Bloomberg survey projected a 165,000 gain. Standard & Poor’s 500 Index futures jumped after the jobs data.

“A better jobs report means there’s less flight to safety,” Brian Booth, a senior market strategist at Long Leaf Trading Group in Chicago, said in a telephone interview. “The initial reaction to the report was a push higher in the dollar and a rise in stocks, and for as long as that continues, gold will struggle.”

Gold futures for August delivery slumped 3.1 percent to settle at $1,212.70 an ounce at 1:46 p.m. on the Comex in New York. Earlier, the price touched $1,206.90, the lowest for a most-active contract since June 28. Trading was 25 percent above the 100-day average for this time, according to data compiled by Bloomberg.

Yesterday, the Comex floor was closed for the Independence Day holiday, and spot gold dropped 0.2 percent. Today, the Dollar Index, a gauge against six currencies, rose to the highest since July 13, 2010.

Silver futures for September delivery tumbled 4.9 percent to $18.736 an ounce on the Comex, the biggest decline since June 20. The metal has dropped 38 percent this year, the most among the 24 raw materials in the Standard & Poor’s GSCI Spot Index.

On the New York Mercantile Exchange, platinum futures for October delivery retreated 1.5 percent to $1,326.40 an ounce, the third straight loss. Palladium futures for September delivery slid 1.2 percent to $677.55 an ounce.

To contact the reporter on this story: Joe Richter in New York at jrichter1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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