Gold Heads for Longest Run of Weekly Losses Since 2004Debarati Roy
Gold futures dropped, capping the longest run of weekly losses since 2004, after Federal Reserve minutes showed policy makers may end monthly purchases of U.S. debt sometime this year.
Minutes from the Fed’s Open Market Committee’s meeting on Dec. 11-12 showed yesterday that members were divided between a mid- or end-of-year end to the debt purchases, known as qualitative easing. The metal pared a decline to a four-month low after the U.S. unemployment rate remained at 7.8 percent in December, signaling the central bank probably won’t rush to end its third round of stimulus efforts.
“The market is being held hostage by the Fed’s statement,” David Lee, a vice president at Heraeus Precious Metals Management in New York, said in a telephone interview. “This is a knee-jerk reaction.”
Gold futures for February delivery slid 1.5 percent to settle at $1,648.90 an ounce at 1:35 p.m. on the Comex in New York. Earlier, the price touched $1,626, the lowest since Aug. 21. This week, the metal dropped 0.4 percent, the sixth straight loss and the longest slump since mid-May 2004.
The Labor Department said today that the November jobless rate was revised up to 7.8 percent.
“The unemployment number tells us that the health of the economy has not improved significantly,” Lee said.
Yesterday, holdings in exchange-traded products backed by gold fell 10.2 metric tons, the most since May, to 2,620.8 tons, data compiled by Bloomberg showed.
Silver futures for March delivery slumped 2.5 percent to $29.946 an ounce, the biggest drop for a most-active contract since Dec. 20. Earlier, the price touched $29.24, the lowest since Aug. 21.
On the New York Mercantile Exchange, platinum futures for April delivery slipped 1.4 percent to settle at $1,558.50 an ounce, the first decline this week. Palladium futures for March delivery dropped 1.2 percent to $688.50 an ounce, extending the weekly loss to 1.7 percent.