Gold Drops From Two-Year High on U.S. Jobs Data, Equities Surge

  • Bullion had climbed for six straight weeks on haven demand
  • ETF holdings of gold rise to highest since July 2013

Gold fell from the highest in more than two years as equities surged and the dollar advanced following a jump in U.S. payrolls, reducing demand for the metal as a store of value.

The S&P 500 Index climbed to an all-time high, while a gauge of global stocks headed for a third straight gain. Government data published Friday showed hiring in the U.S. exceeded analysts’ expectations, boosting equities and other risky assets. The dollar rose against a basket of 10 currencies.

Gold has advanced with silver in 2016 as investors sought a haven from slowing global growth and fallout from the U.K.’s referendum on leaving the European Union. On Monday, equities got support from the prospect of monetary stimulus in the U.K. and Japan, which along with Friday’s U.S. jobs report helped ease investors worries over economic growth.

“U.S. payrolls are keeping a lid on gold,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “It’s under pressure with equity prices going higher and also the dollar index strengthening, so gold is trapped between a rock and a hard place.”

Bullion for immediate delivery slid 0.8 percent to $1,355.49 an ounce at 1:50 p.m. in New York, according to Bloomberg generic pricing, after touching $1,375.34, the highest since March 2014. The metal has posted six straight weekly gains.

Gold futures for August delivery lost 0.1 percent to settle at $1,356.60 an ounce on the Comex in New York.

U.S. government data Friday showed funds have increased their net-long futures and options positions in gold to the highest since the data begins in 2006. Investors have boosted holdings amid speculation that central-bank moves to shore up growth will underpin the metal.

The Bank of England may cut rates at a meeting this week, while an election victory for Japan’s ruling party will bolster Prime Minister Shinzo Abe’s plans for fiscal stimulus. The metal tends to perform better when rates are low because it doesn’t pay interest.

In other metals:

  • Silver futures for September delivery climbed 1 percent to $20.304 an ounce on the Comex.
  • On the New York Mercantile Exchange, platinum and palladium gained.
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