Gold hit a three-week low on Friday as the dollar jumped after US jobs growth unexpectedly accelerated in October, raising chances that the Federal Reserve will taper its stimulus programme before the end of the year. Bullion prices fell as much as 1.9 percent to their lowest since October 17 at $1,282.69 an ounce after data showed employers shrugged off a government shutdown and added 204,000 new jobs to their payrolls last month, well above forecasts for 125,000.
The unemployment rate, however, rose to 7.3 percent from September's 7.2 percent. Spot gold was down 1.8 percent at $1,284.56 an ounce by 1509 GMT. The metal has lost 2.3 percent for the week so far. The next technical support is pegged at $1,270, traders said.
Comex gold futures for December fell $23.90 to $1,284.50 an ounce. "At the moment, the market is looking at underlying growth and can see how the US is accelerating and that very simply leads to tapering one way or another, which is obviously not bullish for gold," BofA Merrill Lynch analyst Michael Widmer said."For gold it is just tough to find something in an environment like that can offset the lack of investor interest."
A scaling back of the Fed's quantitative easing programme would hurt gold, which has been boosted by central bank liquidity and a low interest rate environment, encouraging investors to put money into non-interest-bearing assets. The dollar rose 0.5 percent against a basket of currencies, while US Treasury yields rose to 2.7 percent. As gold pays no interest, the rise in returns from US bonds and other markets is seen as negative for the metal.
Gold has lost about a fifth of its value this year due to fears the Fed would begin cutting back its $85 billion monthly bond purchases. The metal's inflation-hedge appeal has been burnished by the bond purchases and low interest rates. The metal had however managed a rebound in recent weeks after a prolonged budget battle in Washington in October induced investors to believe the Fed may not start withdrawing support for the economy and possibly push the tapering into next year.
Investors will continue to monitor the US labour market data to gauge the Fed's next move. "Spot bullion prices remain hostage to macro releases from the US and the relative dollar value numbers, with very few investors willing to increase their long gold exposure into 2014," VTB Capital said.
Spot silver was down 1.3 percent at $21.35 an ounce, having fallen to a three-week low of $21.31 in earlier session. Spot platinum fell 0.9 percent to $1,436.49 an ounce. The gold-platinum ratio reached its lowest since mid-August at 0.89. Spot palladium fell 0.7 percent to $753.72 an ounce. It reached its highest level since August 15 at $762.25 on Thursday.
Comments
Comments are closed.