Nov. 8 (Bloomberg) -- Gold dropped to a three-week low in New York as payrolls in the U.S. rose more than forecast in October, increasing speculation that the Federal Reserve may start reducing economic stimulus by the end of this year.
The Labor Department said 204,000 workers were added, compared with the median forecast of 120,000, according to a survey of 91 economists. The Bloomberg U.S. Dollar Index gained in three of the past four days. The economy shows signs of “underlying strength,” Fed policy makers said on Oct. 30. The statement pointed to the possibility of reduced bond purchases as soon as December, Citigroup Inc. and Barclays Plc said.
“The strong numbers today increase the probability of tapering starting this year,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “We are seeing a flight toward the dollar.”
Gold futures for December delivery declined 1.8 percent to settle at $1,284.60 an ounce at 2:01 p.m. on the Comex in New York, extending the week’s drop to 2.2 percent. Earlier, prices touched $1,280.50, the lowest for a most-active contract since Oct. 17.
Gold has fallen 23 percent this year and is heading for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation a strengthening economy will spur the Federal Reserve to slow its $85 billion in monthly debt purchases.
Silver futures for December delivery slipped 1.6 percent to $21.317 an ounce in New York.
On the New York Mercantile Exchange, palladium futures for December delivery slid 0.2 percent to $757.90 an ounce. Platinum futures for January delivery dropped 1 percent to $1,442.90 an ounce.
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