Gold Volatility Falls to Lowest This Year Before U.S. Jobs Data

  • Metal’s 60-day volatility drops to the lowest since December
  • Holdings in exchange-traded products decline most in two weeks

Gold volatility dropped to the lowest this year as investors await a U.S. jobs report Friday for further clues about an economy that will influence the timing of interest-rate increases.

The metal’s 60-day volatility on Thursday fell to the lowest since December ahead of the August data. The probability of a rate increase this month was 32 percent, up from 18 percent at the beginning of August.

Gold’s 24 percent gain in 2016 has been dented after Federal Reserve officials indicated a greater likelihood of tightening before the end of the year. Traders will scrutinize Friday’s payrolls report in light of Fed Vice Chairman Stanley Fischer’s comment on Tuesday that the bank will base decisions at its Sept. 20-21 meeting on data. Figures from ADP Research Institute on Wednesday showed companies added workers in August in line with projections.

“Everyone’s just waiting and seeing because of the idea of normalizing interest rates,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said by telephone. “The jobs report, if it’s stronger than expected, will give more validity to a possible hike in September.”

Gold futures for December delivery increased 0.4 percent to settle at $1,317.10 an ounce at 1:48 p.m. on the Comex in New York, rising for the first time in three days.

Gross’s View

Bill Gross, the billionaire manager of the Janus Global Unconstrained Bond Fund, is recommending that the Fed raise rates twice by as early as March, with the first hike at this month’s meeting. The speculation about the Fed’s next step has helped the dollar to recover, blunting gold’s appeal. The Bloomberg Dollar Spot Index rose in August to post the first monthly increase since May.

In other precious metals:

  • Holdings in bullion-backed exchange traded funds fell 11.3 metric tons to 2,021.3 tons on Wednesday, , the biggest decline since Aug. 12, data compiled by Bloomberg show.
  • Silver futures for December delivery gained 1.3 percent to $18.943 an ounce on the Comex, the biggest gain in three weeks.
  • The BI Senior Gold Valuation Peers index rose 2.4 percent, the first increase in 10 sessions. Harmony Gold Mining Co. and Barrick Gold Corp. paced gains.
  • On the New York Mercantile Exchange, platinum and palladium declined.
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