Gold Traders Go Dizzy Weighing U.S. Outlook Against World Growth

Have Gold Prices Found a Floor?

Gold traders are going dizzy.

The metal’s 30-day historical volatility is near the highest since February. Price swings are increasing as investors weigh a robust U.S. jobs market against stagnating global economies that may start to be a drag on American growth. Applications for unemployment benefits in the U.S. declined last week, while orders for business equipment fell in December, separate reports showed. Spot gold dropped Thursday, a day after climbing to a three-month high.

Traders are looking for clues on how the mixed growth scenario will effect the Federal Reserve’s pace of U.S. interest-rate increases. While policy makers said Wednesday that they’re closely monitoring developments from China to Europe for any adverse impact on domestic growth, they also stuck by an outlook for “gradual” monetary tightening this year. Higher rates reduce the appeal of precious metals, which don’t pay interest or offer returns, unlike competing assets.

“The jobs numbers continue to show very good data, people being hired, but the factory orders and other economic news we see from China and Europe are very weak,” George Gero, a vice president of global futures at RBC Capital Markets in New York, said in a telephone interview.

Gold for immediate delivery lost 0.8 percent to $1,115.54 an ounce at 3:12 p.m. New York time, according to Bloomberg generic pricing. The metal touched $1,128.16 on Wednesday, the highest since Nov. 3.

Bullion is still heading for the biggest monthly gain in a year. China’s economic slowdown sparked turmoil across global markets and boosted demand for gold as a haven. The Fed’s comments reassured investors that the pace of rate increases may slow if market tumult continues.

Gold’s advance has lifted producer shares. Barrick Gold Corp. has surged to become Canada’s best-performing stock as a two-month rally in the precious metal gives added lift to the company’s turnaround efforts.

"In the shorter-term, reemerging uncertainty, geopolitical risk, some sentiment that maybe the U.S. Federal Reserve won’t increase rates aggressively, we think that’s going to be positive for gold,” Barrick President Kelvin Dushnisky said in a telephone interview Wednesday.

On the Comex in New York, gold futures for April delivery fell less than 0.1 percent to $1.116.10 an ounce, while silver futures for March delivery dropped 1.6 percent to $14.232 an ounce. Platinum and palladium futures also declined on the New York Mercantile Exchange.

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