Gold Rebounds as Slowing U.S. Pay Gains Ease Fed-Rate Concerns

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Multiple weighted gold bars sit in a stack in this arranged photograph at Gold Investments Ltd. bullion dealers in London, U.K., on Thursday, Nov. 1, 2012. Gold may rise for a third straight day, as China's manufacturing expanded for the first time in three months, increasing demand prospects for commodities. Photographer: Chris Ratcliffe/Bloomberg
Multiple weighted gold bars sit in a stack in this arranged photograph at Gold Investments Ltd. bullion dealers in London, U.K., on Thursday, Nov. 1, 2012. Gold may rise for a third straight day, as China's manufacturing expanded for the first time in three months, increasing demand prospects for commodities. Photographer: Chris Ratcliffe/Bloomberg

Gold gained for the first time in four days after a report showed wages and salaries in the U.S. rose in the second quarter at the slowest pace on record, weakening the case for the Federal Reserve to raise interest rates.

The 0.2 percent advance in pay was the smallest since records began in 1982, the Labor Department said Friday. The dollar fell after the report, boosting demand for gold as an alternative asset.

Fed Chair Janet Yellen and her colleagues are counting on rising wages to boost the economy and bring inflation closer to their 2 percent goal. Gold fell to a five-year low last week on speculation that improving U.S. growth will lead policy makers to raise rates as early as September, curbing the appeal of gold because it doesn’t pay interest.

“The employment cost index was lower than expected, and it does not seem there is enough evidence for a September rate hike,” George Gero, a vice president of global futures at RBC Capital Markets in New York, said in a telephone interview. “That pushed the dollar down and gave gold some support.”

Gold futures for December delivery rose 0.6 percent to settle at $1,095.10 an ounce at 1:50 p.m. on the Comex in New York, after falling as much as 0.9 percent.

Officials will tighten monetary policy when they see “some further improvement in the labor market,” the Federal Open Market Committee said in a statement Wednesday. Investors fled gold in July as holdings in exchange-traded products backed by gold fell to the lowest since 2009, data compiled by Bloomberg show.

Very Bearish

Price slid 6.5 percent this month, the most in two years, on weakening Chinese demand and the prospect of higher U.S. rates. The precious metal is down 7.5 percent for the year.

“The overall trend in the gold market is very bearish,” Gero said.

Silver futures for September delivery advanced 0.3 percent to $14.745 an ounce on the Comex. Prices are down 5.5 percent this year.

On the New York Mercantile Exchange, platinum futures for October delivery slipped 0.5 percent to $985 an ounce. The metal has lost 19 percent in 2015, the worst start to a year since 2001.

Palladium futures for October delivery fell 1.6 percent to $610.85 an ounce, extending the year’s drop to 23 percent.

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