Gold Swings After Slumping Most in Week on U.S. Stimulus Outlook

Gold swung between gains and losses after the biggest drop in more than a week as investors weighed the outlook for the Federal Reserve’s stimulus measures before a jobs report today. Silver was near the highest level in a month.

Gold for immediate delivery rose and fell at least 0.2 percent before trading at $1,335.25 an ounce by 2:12 p.m. in Singapore. Prices dropped 0.5 percent to $1,333.42 yesterday, the biggest loss at close since Oct. 11. Bullion for December delivery was little changed at $1,335 an ounce on the Comex.

Jobless claims in the U.S. probably decreased to 340,000 in the week ended Oct. 19 from 358,000 in the prior period, according to a Bloomberg survey. Gold climbed to the highest in three weeks on Oct. 22 after U.S. employers added fewer jobs in September than economists had estimated, spurring bets the Fed may maintain its $85 billion monthly bond purchases. Bullion lost 20 percent this year amid speculation the central bank will curb the asset purchases.

If today’s jobless data “came out positively, then you could have a reverse of what we’ve seen over recent days. People might be thinking tapering is now more likely to happen sooner rather than later,” said Alexandra Knight, an economist at National Australia Bank Ltd. “Investors who typically invest in U.S. currency-based assets are now shifting towards gold as a safer investment given the dollar’s depreciation.”

Policy makers unexpectedly refrained last month from slowing bond buying. The central bank will delay a reduction in the stimulus until March, according to economists in an Oct. 17-18 Bloomberg survey. Gold rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system to boost the economy.

China Growth

China’s manufacturing strengthened by more than anticipated this month. The preliminary 50.9 reading for a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compared with a 50.4 median estimate from analysts surveyed by Bloomberg News.

Spot bullion of 99.99 percent purity on the Shanghai Gold Exchange traded little changed at 262.14 yuan a gram ($1,340.76 an ounce). Volumes were 7,499 kilograms yesterday from a five-month high of 22,703 kilograms on Oct. 8, data compiled by Bloomberg show.

Silver for immediate delivery gained as much as 0.9 percent to $22.746 an ounce and was at $22.637. Prices climbed to $22.8185 on Oct. 22, the highest since Sept. 20. Platinum advanced 0.5 percent to $1,441.05 an ounce, while palladium was little changed at $746.08 an ounce.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE