Gold extended losses to the lowest this year after U.S. payrolls beat forecasts, boosting the dollar and stoking expectations the Federal Reserve will increase interest rates. Platinum fell to a five-year low and silver declined to the lowest since 2010.
Bullion for immediate delivery lost as much as 0.7 percent to $1,183.24 an ounce, a level last seen on Dec. 31, and was at $1,187.97 by 9:49 a.m. in Singapore, according to Bloomberg generic pricing. Platinum slumped as much as 2.8 percent, while silver decreased 1 percent and palladium fell 2.4 percent.
Investors are shunning gold as signs that the U.S. economy is accelerating boost the dollar and increase expectations the Fed will move closer to raising borrowing costs. Higher rates reduce gold’s allure because the metal generally only offers investors returns through price gains, while a stronger dollar typically cuts demand for a store of value. Prices are headed for the first back-to-back annual loss since 2000 after tumbling 28 percent last year, the most in three decades.
“The U.S. dollar is going one way at the moment and it’s a major headwind,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., said by phone today. “Since the rally in the dollar, we’ve seen further selling in ETF holdings. That’s a dual headwind because it gives a visible lack of confidence for the gold market.”
Dollar Climbs
The Bloomberg Dollar Spot Index rose for a seventh week in the period ended Oct. 3, the longest rally since June 2010, after American employers added more workers than forecast and the unemployment rate fell to the lowest since July 2008. Payrolls increased by 248,000 in September, beating the median estimate in a Bloomberg survey for a 215,000 advance, the U.S. Labor Department said Oct. 3. The unemployment rate fell to 5.9 percent from 6.1 percent in August, data showed.
The Fed is considering the timing for its first interest-rate increases since 2006 amid signs the U.S. economy is recovering. The central bank is on track to end a program of stimulatory bond purchases this month.
Gold for December delivery dropped as much as 0.8 percent to $1,183.30 on the Comex in New York, the lowest for a most-active contract since Dec. 31, and traded at $1,187.90.
Platinum for immediate delivery slumped to as low as $1,190.25 an ounce, the lowest since July 2009, and was at $1,203.25. Spot palladium fell to as low as $737.75 an ounce, the lowest since Feb. 27, before trading at $746.56. Silver slid to as low as $16.6825 an ounce, a level last seen in March 2010, and was at $16.7720.
To contact the reporter on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net
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