• Prices had jumped after weaker-than-expected U.S. jobs data
  • Traders push back expectations for start of U.S. rate increase

Gold retreated as some traders sold the metal to take advantage of the biggest rally in more than eight months. Palladium climbed to a three-month high.

Bullion advanced 2.2 percent on Friday after a report showed U.S. payrolls grew less than economists forecast, easing speculation that the Federal Reserve will increase interest rates this year. Higher borrowing costs curb the appeal of bullion, which doesn’t pay interest or give returns like other assets such as bonds and equities.

Some Fed officials, including Chair Janet Yellen, have said that they expect to raise rates this year, despite the uncertain global outlook. Traders see a 34 percent probability that the central bank will raise rates by December, down from 58 percent a month ago, according to futures data compiled by Bloomberg. Still, some gold investors are taking profits following Friday’s surge, said Bernard Aw, a strategist at IG Asia Pte in Singapore.

“Even though there seems to be delay in the Fed rate hike, eventually we’re going to see an interest-rate increase and if you look at the long term, it’s still going to be a negative for gold,” Aw said by phone. “The physical demand is still not really picking up.”

Bullion Price

Gold for immediate delivery lost 0.6 percent to $1,131.35 an ounce by 12:27 p.m. in London. Friday’s gain ended a five-day run of losses that was the longest since July. That month, prices reached a five-year low.

The metal will probably remain near its current price until new economic data give more clues on when policy makers will start increasing rates, Thorsten Proettel, a commodities analyst at Landesbank Baden-Wuerttemberg, said by phone from Stuttgart, Germany.

Gold producers gained, with the FTSE/JSE Africa Gold Mining Index rising as much as 4.6 percent to the highest in more than a month.

Silver was little changed at $15.2533 an ounce, trading near a two-week high. Platinum added 0.3 percent to $912.47 an ounce while palladium climbed 0.8 percent to $704.65 an ounce. The metal reached the highest since June 19.

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