Gold Declines to Three-Week Low as Job Gains Spur Tapering Bets

Bloomberg (12/11) -- Gold slipped to a three-week low in New York on speculation that signs of a strengthening U.S. economy will encourage the Federal Reserve to curb stimulus measures, eroding the appeal of the metal as a store of value.

U.S. employers added 204,000 workers in October, compared with the 120,000 expected in a Bloomberg survey of economists, Labor Department data showed on Nov. 8. Fed Bank of Atlanta President Dennis Lockhart said the same day that the central bank will consider reducing its bond-buying program at next month’s policy meeting. Last week, prices dropped 2.2 percent.

“Gold will remain under pressure because of tapering talks,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a telephone interview. “The outlook is bearish.”

Gold futures for December delivery lost 0.3 percent to settle at $1,281.10 an ounce at 1:42 p.m. on the Comex in New York, after touching $1,278.10, the lowest for a most-active contract since Oct. 17. Trading was 30 percent below the average for this time of day during the past 100 days, data compiled by Bloomberg show.

Futures have tumbled 24 percent this year, heading for the first annual drop in 13 years, as some investors lost faith in the metal as a store of value and on speculation the Fed will slow its $85 billion in monthly debt purchases.

Silver futures for December delivery declined 0.2 percent to $21.282 an ounce in New York, after touching a three-week low of $21.23.