Gold Falls on Speculation U.S. Data to Boost Case for Tapering

Gold declined in New York, extending the worst monthly performance since June, on speculation a strengthening U.S. economy will warrant less stimulus.

Bullion futures slid 5.5 percent last month as minutes of the Federal Reserve’s latest meeting showed officials said they may reduce their $85 billion in monthly bond purchases “in coming months” as the economy improves.

Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value. U.S. data released last week showed jobless claims unexpectedly fell and leading economic indicators increased. Economists surveyed by Bloomberg News expect reports this week to show growth in American manufacturing and jobs.

“Economic data that came out from the U.S. was mostly positive last week, maintaining fears that the Fed might consider tapering down its asset purchases,” Mumbai, India-based Anand Rathi Commodities Ltd. said today in a report. “A December start to tapering, although unlikely, cannot be completely ruled out. Much of this could depend on how the payrolls data comes out this week.”

Bullion for February delivery fell 1.2 percent to $1,235.60 an ounce by 7:45 a.m. on the Comex in New York. Prices reached $1,226.40 on Nov. 25, the lowest since July 8. Futures trading volume was 12 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Gold for immediate delivery slid 1.4 percent to $1,236.05 in London.

ETP Holdings

Holdings in gold-backed exchange-traded products fell 0.7 metric ton to 1,841.9 tons on Nov. 29, the lowest since March 2010, data compiled by Bloomberg show.

The Fed will pare monthly asset purchases to $70 billion from $85 billion at its March 18-19 meeting, according to a Bloomberg survey last month. The central bank’s next gathering is Dec. 17-18. The U.S. economy probably added 180,000 jobs in November, versus 204,000 in October, according to a Bloomberg News survey before the Labor Department report on Dec. 6.

“As long as U.S. economic data shows improvement, the probability of sooner-than-later tapering becomes more real, which should keep downward pressure on gold prices,” said Wang Xiaoli, chief investment strategist at CITICS Futures Co., a unit of China’s biggest listed brokerage.

Silver futures for March delivery slipped 1.8 percent to $19.68 an ounce in New York. The worst-performing precious metal this year dropped 8.4 percent in November, also the largest decrease since June. Palladium futures for March delivery lost 0.3 percent to $717.50 an ounce. Platinum for January delivery fell 0.8 percent to $1,358.50 an ounce.

To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net

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