Gold Prices Drop Most Since May as U.S. Adds More Jobs

Gold futures fell the most in almost five weeks after the U.S. added more jobs last month than forecast, curbing demand for a haven asset.

The addition of 288,000 jobs followed a 224,000 gain in the prior month, Labor Department figures showed today. The median forecast in a Bloomberg survey of economists called for a 215,000 advance. U.S. equities climbed to a record.

Gold has advanced 9.8 percent this year as the Federal Reserve said it will keep interest rates low for a considerable time after ending bond purchases, while unrest in Iraq and Ukraine spurred demand for a haven. The metal plunged 28 percent in 2013, the most in three decades, as the U.S. economy gained traction.

“The job numbers are telling us that the economy is healthy, and people don’t need a lot of safe haven going forward,” Alfonso Esparza, a senior currency analyst in Toronto at Oanda Corp., said in a telephone interview. “Gold will probably now start weakening again.”

On the Comex in New York, gold futures for August delivery fell 0.8 percent to settle at $1,320.60 an ounce at 1:40 p.m., the biggest drop for a most-active contract since May 30. On July 1, the metal reached $1,334.90, the highest since March 24.

Jobs Recovery

Gold climbed 70 percent from December 2008 to June 2011 as the central bank bought debt and held borrowing costs near zero percent to bolster the economy.

The metal last year ended a 12-year bull run amid an equity rally to a record and concern the Fed would taper bond buying.

The central bank trimmed purchases for a fifth consecutive time, to $35 billion, at its June meeting. Rising home and equity prices and an improving global economy should help stoke above-trend growth in the U.S., Fed Chair Janet Yellen said on June 18.

“Today’s jobs data was a very good indicator that the economy is healing,” Chris Gaffney, the senior market strategist at EverBank Wealth Management in St. Louis, said in a telephone interview. “Gold will suffer as people think that the chances of the Fed considering raising interest rates has increased.”

Silver futures for September delivery dropped 0.8 percent to $21.137 an ounce on the Comex. Yesterday, the price reached $21.335, the highest since March 17. The precious metal has gained 9.1 percent this year.

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 Steve Stroth

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.