Gold Gains to One-Month High on Speculation Fed to Slow Tapering

Gold climbed to the highest level in a month on speculation that the Federal Reserve will slow the pace of cuts to stimulus after U.S. payrolls increased less than analysts forecast. Silver, platinum and palladium rose.

Bullion for immediate delivery advanced as much as 0.6 percent to $1,255.45 an ounce, the highest price since Dec. 12, before trading at $1,251.75 by 10:36 a.m. in Singapore. Prices rose 0.9 percent last week. Gold for February delivery increased as much as 0.7 percent to $1,255.30 an ounce on the Comex in New York, also the highest since Dec. 12.

Spot gold climbed for a third week, the longest such rally since August, as U.S. employers added 74,000 jobs in December, the fewest since January 2011 and less than the most pessimistic projection in a Bloomberg survey. The Fed said Dec. 18 it will reduce its monthly bond purchases to $75 billion from $85 billion, citing improvements in the labor market.

“The payroll data gave an impression that tapering may be a long-drawn process,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone today.

The gain in payrolls followed a revised 241,000 advance the prior month, Labor Department figures showed Jan. 10. The median forecast of 90 economists in the survey called for an increase of 197,000. The unemployment rate fell to 6.7 percent, the lowest since October 2008, as more people left the labor force.

The net-long position, or bets on rising prices, in gold jumped 18 percent to 40,229 futures and options in the week ended Jan. 7, U.S. Commodity Futures Trading Commission data show. That’s the highest since mid-November. Short holdings slid 5.3 percent to 68,707, the lowest since mid-November.

Fed Tapering

Spot prices lost 28 percent in 2013, the most since 1981 and the first annual drop since 2000, after some investors lost faith in the metal as U.S. growth rebounded. The Fed minutes released Jan. 8 didn’t describe a detailed schedule for asset-purchase reductions. The central bank will “continue to do, probably at each meeting, a measured reduction” in the pace of purchases, Chairman Ben S. Bernanke said last month.

Silver for immediate delivery rose as much as 1.1 percent at $20.3671 an ounce, the highest since Jan. 2. Platinum rose 0.4 percent to $1,442.21 an ounce, the highest since Nov. 15 before trading at $1,440.95. Palladium climbed as much as 0.5 percent to $746.65, the highest since Nov. 12, and was at $745.25.

To contact the reporter on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net

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

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