London - Gold fell for a second day in London as the dollar strengthened before US jobs data that may add to signs the economy is improving, fueling speculation the Federal Reserve will scale back monetary stimulus.
The metal gained as much as 2.7 percent this week as a record 23 percent slump in the second quarter spurred purchases.
The dollar reached a five-week high against six major currencies before today’s employment report and after European Central Bank President Mario Draghi and Bank of England Governor Mark Carney signaled they will keep borrowing costs at record lows.
Bullion slipped 26 percent this year, wiping $60.8 billion from the value of gold-backed exchange-traded product holdings, after some investors lost faith in the metal as a store of value as Fed Chairman Ben S. Bernanke said the central bank may slow asset purchases this year.
Economists surveyed by Bloomberg expect data to show the US jobless rate fell to 7.5 percent in June from 7.6 percent in May, with companies adding 165,000 positions last month after increasing them by 175,000 in May.
“The US payroll numbers, which are expected to remain higher and should support the dollar, will be closely watched,” analysts at Hyderabad, India-based Karvy Comtrade Ltd. wrote today in a report.
“This might increase concerns that the Fed could support the slowdown of the monetary stimulus program, which might extend the weakness in gold.”
Gold for immediate delivery fell 1.3 percent to $1,234 an ounce by 10:02 a.m. in London.
Prices were little changed this week after reaching $1,180.50 on June 28, the lowest since August 3, 2010.
Bullion for August delivery dropped 1.4 percent to $1,234 on the Comex in New York.
Floor Trading
New York floor trading was closed yesterday for the Independence Day holiday, and yesterday’s transactions will be booked with today’s trades for settlement purposes.
Futures trading volume was 77 percent above the average in the past 100 days for this time of day, according to data compiled by Bloomberg.
Gold as much as doubled from 2008 to a record $1,921.15 in September 2011 as the US central bank led nations in cutting interest rates and buying debt.
Gold ETP holdings were at 2,036.9 metric tons on July 3, the lowest since May 2010, data compiled by Bloomberg show.
“With many players off for the holiday, the lack of market depth could exaggerate any moves,” Jim Pogoda, a trading consultant for New York-based Gold Bullion International, said yesterday in an e-mail.
“A much stronger than expected report should press gold to challenge the recent low of $1,180. A weaker report could ignite some short covering,” he said, referring to purchases to close out bearish bets.
Silver for immediate delivery fell 2.1 percent to $19.1536 an ounce in London.
It’s down 2.7 percent this week and is the worst performer in the Standard & Poor’s GSCI gauge of 24 commodities this year.
Platinum lost 0.4 percent to $1,333 an ounce in London.
Palladium was down 0.4 percent at $673.58 an ounce. - Bloomberg News