Gold Falls in London on Speculation Fed to Curb Stimulus

Gold swung between gains and losses in New York before settling little changed as investors weighed signs that the Federal Reserve will curb stimulus this month against the possibility of U.S. air strikes on Syria.

While gold futures rose 1 percent on Sept. 6 after data showed U.S. employers added fewer jobs than estimated in August, the report wasn’t enough to derail economists’ expectations that the Fed will pare stimulus measures. The central bank will taper monthly bond purchases to $75 billion from the current $85 billion pace at its Sept. 17-18 meeting, according to the median estimate of 34 economists surveyed by Bloomberg News on Sept. 6.

Bullion reached a three-month high of $1,434 an ounce on Aug. 28 as demand surged since late June in Asia and amid concern the U.S. will attack Syria for its alleged use of chemical weapons against civilians. Gold is down 17 percent this year as some investors lost faith in the metal as a store of value and on speculation the Fed will curb stimulus.

“Heightened geopolitical tensions regarding Syria have contributed to gold’s recent strength,” Suki Cooper, an analyst at Barclays Plc in New York, wrote in a report e-mailed today. “Although the weaker-than-expected non-farm payrolls data provided a boost to prices, our economists believe the report was sufficient to greenlight a tapering of Fed asset purchases this month.”

Gold futures for December delivery climbed less than 0.1 percent to close at $1,386.70 at 1:50 p.m. on the Comex in New York. Prices fell as much as 0.3 percent and rose as much as 0.6 percent. Trading was 54 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.

U.S. Data

U.S. payrolls rose by 169,000 last month, less than the 180,000 estimate in a Bloomberg survey, Labor Department figures showed on Sept. 6. U.S. reports released since late August showed the economy expanded more than estimated in the second quarter and a gauge of manufacturing climbed to a two-year high.

President Barack Obama will make a final push this week to persuade Congress and the American public to support air strikes against Syria. He failed to win backing from foreign leaders at a Group of 20 summit for military action. The Senate is expected to vote on a resolution by the end of this week, and the House of Representatives will probably debate the proposal next week.

Holdings in exchange-traded products backed by gold fell 1 metric ton last week, after rising the previous three weeks, data compiled by Bloomberg show. Hedge funds and other large speculators increased their net-long position, or bet on higher prices, by 3.6 percent in the week ended Sept. 3 to 101,396 contracts, the most since January, U.S. Commodity Futures Trading Commission data show.

Silver futures for December delivery fell 0.7 percent to $23.717 an ounce in New York.

On the New York Mercantile Exchange, platinum futures for October delivery declined 0.8 percent to $1,483 an ounce. Palladium futures for December delivery slid 2 percent to $683 an ounce, the seventh drop in eight sessions.

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

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

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