Gold Declines to One-Week Low After U.S. Payrolls Top Estimates

Gold fell to a one-week low as U.S. employers added more workers than projected last month, reducing pressure on the Federal Reserve to slow the pace of tapering monetary stimulus.

The 175,000 gain in employment compares with a 149,000 advance forecast by a Bloomberg survey of economists, government data showed today. Unemployment rose to 6.7 percent from 6.6 percent as more people entered the labor force and didn’t find work. The Fed, which meets March 18-19, announced a $10 billion reduction in bond buying at each of its past two meetings, leaving purchases at $65 billion.

Gold has climbed 11 percent this year on demand for a haven amid turmoil in Ukraine and concern that the U.S. economy is faltering. In 2013, the metal tumbled 28 percent, the most since 1981, as U.S. equities surged to a record and the inflation rate remained low.

“The fear trade will fade as today’s employment figures shows that the economy is improving,” Lance Roberts, who oversees $600 million as chief executive officer of STA Wealth in Houston, said in a telephone interview. “The headlines from Russia will continue to support gold, but there is not much steam left in the rally.”

Gold futures for April delivery dropped 1 percent to settle at $1,338.20 an ounce at 1:44 p.m. on the Comex in New York, the biggest drop for a most-active contract since Feb. 26. Earlier, the metal touched $1,326.60, the lowest since Feb. 28.

This week, gold climbed 1.3 percent. On March 3, the metal reached $1,355, the highest since Oct. 30, as tensions between Ukraine and Russia escalated.

Political Standoff

Ukraine said it won’t compromise on the future of Crimea as lawmakers in Moscow pledged to accept the results of a vote on the Black Sea region joining Russia.

The standoff can be resolved diplomatically through talks between Russia and Ukraine’s government, U.S. President Barack Obama told Russia’s Vladimir Putin, the White House said.

Yesterday, holdings in exchange-traded products backed by gold rose 6.9 metric tons, the most in three weeks, to 1,752.2 tons, data compiled by Bloomberg show. Last month, assets fell to the lowest since October 2009 as the Fed reduced debt purchases.

Gold surged 70 percent from December 2008 to June 2011 as the central bank pumped more than $2 trillion into the financial system and lowered interest rates to a record low to boost growth.

U.S. jobs data “is weighing on gold,” said Tommy Capalbo, a broker at Newedge Group in New York. “Today’s numbers make it clear that tapering will continue.”

Analysts Divided

Analysts are divided on the outlook for gold, down 30 percent from a record $1,923.70 on Sept. 6, 2011.

The price will slump toward $1,100 by the end of the year as the U.S. recovery picks up momentum and the dollar gains, according to Michael Lewis, the head of commodity research at Frankfurt-based Deutsche Bank AG.

Increasing demand from buyers of coins, jewelry and bars will help to sustain the rally this year, according to James Steel, chief precious metals analyst at HSBC Securities Inc. in New York.

On the New York Mercantile Exchange, palladium futures for June delivery gained 0.1 percent to $781.80 an ounce, the highest settlement since April 1.

The price climbed for the fifth straight week, the longest rally since December 2012, as the U.S. and its allies threaten sanctions against Russia, the world’s biggest supplier, following the incursion into Ukraine’s Crimea region.

Silver futures for May delivery declined 3 percent to $20.928 an ounce on the Comex. The price touched $20.755, the lowest since Feb. 14.

Platinum futures for April delivery fell 0.2 percent to $1,483.60 an ounce on the Nymex.

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net

To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net Patrick McKiernan

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