Gold fell below $1,300 an ounce to the lowest level in two weeks as U.S. economic reports backed the case for reduced stimulus and investors awaited employment data. Silver also slid to a two-week low.
Spot gold lost as much as 2 percent to $1,283.49 an ounce, the lowest since July 19, and was at $1,286.52 at 2:38 p.m. in Singapore. Prices dropped for a sixth day, the worst run since May. U.S. jobless claims fell to a five-year low and factory output grew in July, reports showed yesterday, helping the Bloomberg dollar Index rally the most in more than a month and the Standard & Poor’s 500 Index climb to a record.
Gold has retreated 3.5 percent this week, heading for the biggest drop since the five days to June 28. Data today may show that U.S. unemployment fell in July, while employers added 185,000 jobs. The Federal Reserve said this week that it will maintain its $85 billion monthly asset-buying program and that persistently low inflation could hamper the economic expansion.
“While the Fed hasn’t reduced stimulus or announced any plans for tapering, U.S. economic data has been showing gradual improvement,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., a unit of one of China’s largest state-owned investment companies. “Gold has been holding above $1,300 for two weeks as investors awaited the all-important jobs report, but it appears some people are tired of waiting,” Sun said by phone from Shanghai.
Gold traders are bearish for the first time in six weeks as accelerating U.S. economic growth and weaker sales of physical bullion curbed demand, with 12 analysts surveyed by Bloomberg expecting prices to fall next week, while nine were bullish and four neutral.
In China, the second-largest bullion consumer, the volume for Shanghai’s benchmark spot contract were 11,810 kilograms yesterday from 10,075 kilograms on July 31, the least since May 13. Volumes reached a record 43,272 kilograms on April 22.
Gold has fallen 23 percent this year amid speculation that the Fed may taper asset purchases that helped to cap a 12-year bull run last year. Bullion entered a bear market in April as investors lost faith in the metal as a store of value and sold it from exchange-traded products at a record pace.
Assets in the SPDR Gold Trust, the biggest bullion-backed exchange-traded fund decreased to 921.05 metric tons yesterday, after being unchanged for four days. Holdings have contracted 32 percent this year to the lowest level since February 2009.
Gold for December delivery lost as much as 2.2 percent to $1,282.50 an ounce on the Comex in New York, and last traded at $1,284.70, falling for a fourth day. Futures are heading for the first weekly loss in a month.
Silver for immediate delivery lost as much as 1.5 percent to $19.3245 an ounce, the lowest level since July 18, and was $19.3710. Spot platinum and palladium also declined.