Gold Is ‘Without Friends’ as Investors Await U.S. Jobs Report

Gold Inches Higher for a Second Day
  • Gold volume and volatility fall as metal moves sideways
  • Silver heads for fifth weekly drop, worst run since November

Gold is treading water as investors await U.S. employment data that should give further clues on the timing of an interest-rate increase by the Federal Reserve.

After a month of losses to the lowest since February, prices are little changed this week. A gauge of volatility has dropped to a four-month low and the volume of U.S. futures so far this week is the least since the start of the year.

The metal has pared its rally this year to 14 percent as bets increase that the Fed will raise borrowing costs by in June or July, damping the appeal of bullion which doesn’t pay interest. Economists surveyed by Bloomberg expect Friday’s jobs report to show employers added 160,000 jobs in May, the same as April, with the unemployment rate slipping to 4.9 percent. The Fed ends its next policy meeting on June 15.

“Precious metals continue sideways,” David Govett, head of precious metals at Marex Spectron Group Ltd. in London, said by e-mail. “Volumes have been muted the last few days, as have the ranges. This shows that the market is undecided at the moment as to the next move.”

Bullion for immediate delivery added 0.1 percent to $1,211.56 an ounce by 10:19 a.m. in London, according to Bloomberg generic pricing. It dropped 6 percent in May. Open interest, a tally of outstanding contracts in futures on the Comex in New York, on Thursday fell to the lowest since April 6.

‘Without Friends’

Gold rallied this year as money managers boosted bets on more price gains. In the week to May 24, speculators cut their net-long positions by 26 percent, the most this year, prompting Australia & New Zealand Banking Group Ltd. to say in a note Friday that the metal “remains without friends.”

“The major driver of the May sell-off in gold was increased expectations of a Fed hike, though it was also technically overbought,” Jordan Eliseo, Sydney-based chief economist at trader Australian Bullion Co., said by e-mail. “A strong payrolls report will confirm the likelihood of an imminent move by the Fed, and could see gold tested again. This correction provides an opportunity for those who missed out on some of the first-quarter gains.”

In other precious metals news:

  • Holdings in gold-backed exchange-traded funds added 4.7 metric tons to 1,851.9 tons as of Thursday, the highest level since November 2013, data compiled by Bloomberg show.
  • Silver rose 0.5 percent. The metal has fallen 0.9 percent this week, set for a fifth weekly loss, the longest run since November.
  • Palladium rose 0.9 percent and platinum was little changed.
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