Gold Falls First Time in Six Sessions as China Calms Markets

  • China moves to halt stock rout that spread around the world
  • Futures extend losses after U.S. December payrolls advance

Gold futures fell, snapping the biggest five-day rally in almost a year, as a buoyant U.S. labor market and China’s moves to halt a rout in stocks cut demand for a haven.

Chinese authorities suspended a controversial circuit-breaker system, set a higher yuan reference rate and directed state-controlled funds to buy shares. Gold extended declines after a report showed U.S. payrolls rose more than expected in December, boosting the dollar and reducing demand for an alternative investment.

“Calmer markets in China and stabilization in the yuan have resulted in gold longs taking profit,” Georgette Boele, an Amsterdam-based analyst at ABN Amro Bank NV, said by e-mail. “Palladium recovered on the same dynamics.”

Gold futures for delivery in February fell 0.9 percent to settle $1,097.90 an ounce at 1:59 p.m. on the Comex in New York. Prices jumped 4.5 percent in the previous five sessions, the biggest increase since January last year. Bullion is up 3.6 percent this week.

The metal has outperformed other commodities this week as more than $4 trillion was erased from global equities. Investors bought the most through bullion-backed funds in almost three weeks on Thursday, lifting assets from the lowest since 2009. Holdings and prices dropped in the past three years as expectations of tighter U.S. monetary policy cut the appeal of precious metals, which don’t pay interest, unlike competing assets.

U.S. Payrolls

The 292,000 gain in U.S. payrolls exceeded the highest forecast in a Bloomberg survey and followed a 252,000 increase in November that was stronger than previously estimated, a Labor Department report showed Friday. The median forecast in a Bloomberg survey called for a 200,000 advance. The jobless rate held at 5 percent, and wage growth rose less than forecast from a year earlier.

“It’s these blow out numbers that potentially accelerates the frequency of rate hikes and that puts pressure on the gold market,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “It’s widely expected that China will go back to the drawing board over the weekend to come up with a new strategy” to spur growth and reduce volatility in the market, he said.

Shares of gold miners fell. An index of 14 producers tracked by Bloomberg Intelligence slid for for the first time in six sessions. Harmony Gold Mining Co. The Randfontein, South Africa-based company lost 4.6 percent in Johannesburg, cutting its weekly rally to 44 percent. Barrick Gold Corp. declined 4 percent in Toronto.

Silver futures also retreated on the Comex, while palladium and platinum rose on the New York Mercantile Exchange.

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