Gold Tumbles From Five-Week High as U.S. Jobless Claims Decline

  • Gold on pace for first drop in a week as jobs outlook improves
  • ECB policy makers hold interest rates unchanged on Thursday

Gold fell from a five-week high and posted its first decline in a week after a gauge of U.S. unemployment tumbled to the lowest since 1973, damping the metal’s appeal as a haven.

Jobless claims unexpectedly dropped for the week ended April 16 in a signal that employers are still optimistic about the U.S. demand outlook. Gold earlier rose to the highest since March 11 as European Central Bank policy members kept the benchmark interest rate at zero. Lower rates are a boon to precious metals, which don’t offer yields or dividends. The dollar gained, reducing demand for gold as an alternative asset.

“Gold ticked negatively on that good economic number because it brought back the thought of a rate increase being back on the table,” George Gero, a managing director at RBC Wealth Management in New York, said in a telephone interview. “It seems like good figures scare traders because good news is bad news, meaning there’s a rate hike possibility even though the Europeans kept rates unchanged earlier.”

Gold futures for delivery in June slid 0.3 percent to settle at $1,250.30 an ounce at 1:43 p.m. on the Comex in New York, after rising to as high as $1,272.40.

Gold may advance to as much as $1,400 an ounce in the next 12 months, according to BNP Paribas SA, which cited rising investor concern about the efficacy of central banks’ policies to sustain growth. “There has clearly been an uptick in general investor concern about the eroding effectiveness and potential overreach of global central bank policies,” BNP’s wealth-management arm said in a briefing at a conference in Singapore Thursday.

Holdings in exchange-traded funds backed by silver climbed to 19,950.4 metric tons as of Wednesday, nearing an all-time high of 20,182.2 tons reached in 2014, according to data compiled by Bloomberg. Assets in gold ETFs backed were little changed at 1,756.9 tons on Wednesday.

In other metals:

  • Platinum and palladium advanced on the New York Mercantile Exchange.
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