Gold Futures Jump Most in Two Months After Dollar Slumps

Gold rose the most in two months as the dollar headed for the biggest drop in almost a year, reviving the metal’s appeal as an alternative investment after prices touched a 2014 low. Silver jumped the most in 15 weeks.

The dollar fell as much as 0.9 percent against a basket of 10 currencies as uneven U.S. labor-market data fuels speculation on when the Federal Reserve will raise interest rates. On Oct. 3, the greenback reached a four-year high as gold slumped below $1,200 for the first time since Dec. 31.

“The dollar drifting lower is adding support to gold,” Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said in a telephone interview. “Almost all of gold’s weakness we’ve seen has been a strong-dollar move.”

Gold futures for December delivery gained 1.2 percent to settle at $1,207.30 an ounce at 1:45 p.m. on the Comex in New York, the biggest increase since Aug. 6. The price has dropped 7.8 percent in the past 12 months.

From December 2008 to June 2011, gold jumped 70 percent as the Fed bought debt and held borrowing costs at an all-time low to bolster the economy. Policy makers are considering the timing for the first rate increase since 2006 amid signs the economy is recovering.

“Gold has held up relatively well compared to the other precious metals but, in our view, remains vulnerable,” Barclays Plc analysts including Suki Cooper said in a note. The bank said it expects the Fed to start increasing rates in June, “earlier than current market pricing of October 2015.”

Job Gains

On Oct. 3, the dollar capped the seventh straight week of gains, the longest rally since June 2010, after a government report showed employers in the U.S. added more workers than forecast and the unemployment rate fell to the lowest since July 2008.

At the same time, the participation rate, which measures the number of Americans employed or looking for a job as a share of the working-age population, fell to the lowest since February 1978. Average hourly earnings were unchanged.

China, the world’s largest consumer of gold, ends a week-long national holiday on Oct. 8.

Silver futures for December delivery gained 2.4 percent to $17.225 an ounce, the biggest gain since June 19. On Oct. 3, the price touched $16.64, the lowest since March 26, 2010. The metal has dropped 21 percent in the past 12 months.

On the New York Mercantile Exchange, platinum futures for January delivery gained 1.8 percent to $1,249.20 an ounce, the biggest gain since July 1.

Earlier, the price touched $1,186.50, the lowest since July 31, 2009, amid concern that demand is dwindling from Europe to China. The price has dropped 10 percent in the past 12 months.

Palladium futures for December delivery advanced 1.5 percent to $766.10 an ounce. Earlier, the metal touched $735, the lowest since Feb. 27. The price has climbed 9.1 percent in the past 12 months.

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