Gold, Silver Decline to Four-Week Lows on Jobs Data, Fed Outlook

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Gold and silver futures fell to four-week lows after a report showed fewer U.S. workers filed jobless claims, fueling concern that a firm labor market keeps the Federal Reserve on pace to raise interest rates this year.

Applications for unemployment benefits decreased by 8,000 to 276,000 in the week ended May 30, a Labor Department report showed Thursday. Holdings in exchange-traded products backed by gold extended losses Wednesday to the lowest since 2009.

The metal erased gains for the year as the jobs data added to signs that the economy is strong enough to sustain higher borrowing costs, paving the way for the Fed to increase its benchmark rate for the first time since 2006. Higher rates erode the appeal of gold, which doesn’t pay interest, as investors seek higher-yielding assets including new bonds.

“Today’s jobless data is another indication that the economy is moving along: the pace is not impressive, but it’s definitely showing some signs of improvement,” Alfonso Esparza, a senior currency analyst at Oanda Corp. in Toronto, said in a telephone interview. “Gold does not stand much of a chance in an environment where people are talking about higher rates.”

Gold futures for August delivery fell 0.8 percent to settle at $1,175.20 an ounce at 1:44 p.m. on the Comex in New York. Earlier, the price touched $1,172.40, the lowest for a most-active contract since May 1.

Silver futures for July delivery fell 2.3 percent to $16.103 an ounce. The price touched $16.08, the cheapest since May 1.

Unemployment Rate

U.S. payrolls data for May is due Friday. The economy probably added 225,000 jobs last month, compared with 223,000 in April, with the unemployment rate remaining at 5.4 percent, according to a Bloomberg survey.

Gold has dropped 10 percent from this year’s high of $1,307.80 on Jan. 22. A gauge of the metal’s 60-day volatility has eased since late January.

“People are really waiting for the jobs numbers,” Frederic Panizzutti, global head of sales at MKS Switzerland PAMP Group, said in a telephone interview from Dubai. “Physical demand is pretty slow, and volatility has died. We really need to have a strong deviation in the jobs numbers to move us out of this range.”

On the New York Mercantile Exchange, palladium futures for September delivery declined 0.4 percent to $755.30 an ounce. The price fell for the fifth straight session, the longest slump since Jan. 5.

Platinum futures for July delivery dropped 0.4 percent to $1,099.20 an ounce.

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