Gold Drops as U.S. Jobless Claims Fall to Seven-Year Low
Gold futures fell the most in a week as declining U.S. jobless claims signaled a rebounding economy, reducing demand for the metal as a haven.
The fewest Americans in seven years filed applications for unemployment benefits last week. Gold tumbled 28 percent in 2013, the biggest annual decline since 1981, as equities rallied to a record and the economy gained.
Holdings in exchange-traded products backed by gold have dropped to the lowest since 2009. Some investors lost faith in the metal as a store of value after the Federal Reserve cut monetary stimulus. Fed Chair Janet Yellen addresses the U.S. Chamber of Commerce today.
“Jobless claims dropping below 300,000 is a big deal and people are getting convinced that the economy is showing signs of recovery,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “People don’t need to invest in a safe-haven asset like gold when the economy is doing just fine.”
Gold futures for June delivery fell 0.9 percent to settle at $1,293.60 an ounce at 1:49 p.m. on the Comex in New York, the biggest drop for a most-active contract since May 7. Trading was 7.8 percent higher than the 100-day average for this time, according to data compiled by Bloomberg.
This year, the metal climbed 7.6 percent as tensions mounted between Ukraine and Russia.
“If the data continue portraying a bright picture of the U.S. economy, we expect gold to give up” some gains, Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report.
Silver futures for July delivery fell 1.5 percent to $19.484 an ounce on the Comex, the first decline this week.
On the New York Mercantile Exchange, platinum futures for July delivery dropped 1.1 percent to $1,469.90 an ounce. Yesterday, the price reached $1,487.60, the highest since March 7.
In South Africa, the world’s top producer, Lonmin Plc (LMI) said that more employees returned to mines today. The company prepared to resume operations in a bid to break a labor walkout that has crippled output since Jan. 23.
Palladium futures for June delivery slumped 2 percent to $812.10 an ounce. Trading was 45 percent higher than the 100-day average for this time, according to Bloomberg data. Yesterday, the price reached $829.20, the highest since August 2011.
Russia is the top supply source, The country faces the prospect of more sanctions by western nations because of escalating tensions with Ukraine. South Africa is the second-biggest producer.
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