Gold futures advanced as investors weighed an increase in U.S. payrolls with limited wage gains and prospects for a boost in interest rates by the Federal Reserve.
The 223,000 net increase in payrolls in April followed an 85,000 gain in March that was the smallest since June 2012, figures from the Labor Department showed Friday. Average hourly earnings climbed less than forecast. The dollar declined against a basket of 10 currencies.
Gold has posted three straight monthly losses, the longest slump since December 2013, as the outlook for higher borrowing costs prompts investors to favor assets with better yield prospects, such as equities. The Fed is watching the labor market for signs that it can sustain higher borrowing costs before lifting a benchmark rate for the first time since 2006.
“While the employment numbers are strong, the wage growth is disappointing,” Mike Meyer, a vice president at EverBank Wealth Management in St. Louis, said in a telephone interview. “There is no wage inflation as of now, so the speculation about the timing of the rate hike continues.”
Gold futures for June delivery climbed 0.6 percent to settle at $1,188.90 an ounce at 1:43 p.m. on the Comex in New York. This week, the price climbed 1.2 percent, the most since late March.
Average hourly earnings rose 0.1 percent after a revised 0.2 percent gain that was weaker than initially reported. Compared with a year earlier, hourly pay was up 2.2 percent last month, less than the Bloomberg median estimate of 2.3 percent.
The dollar’s nine-month rally ended in April amid conflicting economic data, supporting gold. Federal Reserve Chair Janet Yellen said Wednesday that bond yields “could see a sharp jump” when rates rise, a bearish signal for the metal.
The Fed called weak economic growth in the first quarter “transitory,” leaving the door open for an increase this year.
“Wage inflation will be the key data that could drive the acceleration in any policy decision,” George Zivic, a New York-based portfolio manager at OppenheimerFunds Inc., said in a telephone interview. “I think we remain in a wait-and-see-mode.”
Silver futures for July delivery rose 1 percent to $16.465 an ounce on the Comex.
On the New York Mercantile Exchange, palladium futures for June delivery jumped 2.1 percent to $802.35 an ounce. Earlier, the price reached to $803, the highest for a most-active contract since March 11. Volume for all months was 29 percent above the 100-day average, according to data compiled by Bloomberg.
Platinum futures for July delivery climbed 1.1 percent to $1,143.50 an ounce. The price dropped in the previous three days, the longest slump in four weeks.