Gold Set for Weekly Loss Before Payrolls Data Amid Taper Bets

Gold headed for a weekly drop as investors await U.S. payrolls figures after economic data boosted speculation the Federal Reserve may start trimming its monetary stimulus sooner than estimated.

Bullion for immediate delivery traded at $1,228.88 an ounce at 9:02 a.m. in Singapore from $1,225.17 yesterday. Prices are set to drop 2 percent this week after tumbling to $1,211.75 on Dec. 4, the lowest since July 5. Gold for February delivery lost 0.3 percent to $1,228 on the Comex.

Gold tumbled 27 percent this year, set for the first annual loss since 2000, on speculation the Fed will begin paring its $85 billion in monthly bond purchases as the economy picks up. Fed Reserve Bank of Atlanta President Dennis Lockhart said yesterday any decision to taper should be accompanied by a limit on the size of the program or a timetable for ending it. Policy makers next meet Dec. 17-18.

“Gold has been dragged lower, for the bulk of this year, on the uncertainty over a possible Fed tapering”, James Steel, an analyst at HSBC Securities (USA) Inc. in New York, wrote in a note. “Forward guidance on QE ’tapering’ would remove this uncertainty and provide some relief for the bullion markets.”

Employers boosted payrolls in November by 185,000 workers and the unemployment rate fell to 7.2 percent from 7.3 percent, according to economist estimates before today’s Labor Department figures. Jobless claims unexpectedly fell to 298,000 in the week ended Nov. 30, the lowest in more than two months, a report showed yesterday.

Debt Purchases

Minutes of the Federal Reserve’s October meeting released Nov. 20 showed that policy makers expected an improving economy will allow the central bank to trim its debt purchases in coming months. Bullion rose 70 percent from December 2008 to June 2011 as the central bank pumped more than $2 trillion into the financial system.

The market may be underestimating the probability of a vote to taper later this month, Credit Suisse Group AG said in a Dec. 4 report. Policy makers will probably wait until March before reducing monthly bond purchases, economists surveyed by Bloomberg News last month said.

Silver for immediate delivery was little changed at $19.4002 an ounce, down 3 percent this week. Prices dropped to $18.9003 on Dec. 4, the lowest since July 8. Palladium was little changed at $734.55 an ounce, set for a second weekly advance. Platinum traded little changed at $1,362.70 an ounce.

To contact the reporter on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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