Gold fell the most in a week as a private report signaling U.S. employment growth added to speculation that the Federal Reserve is getting closer to raising interest rates.
Firms added more jobs in August than a month earlier, the ADP Research Institute said on Wednesday. Traders will be focused on the government payrolls report due Friday for more clues on whether growth is strong enough to sustain higher rates. Stubbornly low inflation along with the prospect of tighter U.S. monetary policy has kept a lid on gold, which doesn’t pay interest or offer returns, unlike competing assets.
Global holdings in exchange-traded products backed by gold fell Tuesday by the most since July. While bullion prices got a lift in August amid a Chinese equity rout, signs of resilient U.S. expansion since then have increased speculation that Fed officials will follow through with their plans for tighter monetary policy this year.
"Ultimately, we’re going to get a rate hike at some point, and then you don’t get any interest holding gold," Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in a telephone interview.
Gold futures for December delivery dropped 0.5 percent to settle at $1,133.60 an ounce at 1:44 p.m. on the Comex in New York, the biggest decline since Aug. 26.
Assets in ETPs dropped by 6.9 metric tons on Tuesday to 1,522.7 tons, the biggest drop decline since July 31. The holdings have shrunk 12 percent in the past 12 months as some investors lost their faith in the metal as a store of value.
Silver futures for December delivery gained 0.3 percent to $14.667 an ounce for a fifth straight gain, the longest stretch in three months on the Comex. On the New York Mercantile Exchange, platinum futures for October delivery added 0.5 percent to $1,013.60 an ounce, and palladium futures for December delivery added 0.7 percent to $583.35 an ounce.