Gold Holds Near Lowest in Two Weeks as U.S. Jobless Rate Drops – Bloomberg

Gold held near its lowest level in more than two weeks after the U.S. unemployment rate dropped to a seven-year low, adding to the case for the Federal Reserve to raise interest rates this month.

Bullion for immediate delivery dropped as much as 0.4 percent to $1,117.89 an ounce before trading at $1,123.26 at 2:46 p.m. in Singapore, according to Bloomberg generic pricing. Prices fell to $1,116.93 in intraday trading on Friday, the lowest since Aug. 19, and posted a second weekly decline.

The jobless rate fell to 5.1 percent in August, the lowest since April 2008, a government report showed Friday. The Fed is weighing whether the economy is strong enough to tighten monetary policy, which would curb the appeal of gold because the metal doesn’t pay interest like other assets such as bonds.

“The lower jobless rate would be an indicator that the Fed would be expecting to perhaps raise rates in September and that would have been why the gold price eased up,” David Lennox, resource analyst at Fat Prophets in Sydney, said by phone. “We believe they won’t take any action,” he said, adding that a rate increase in 2016 was more likely.

While employers added a less-than-forecast 173,000 workers in August, the increase followed advances in July and June that were stronger than previously reported. Economists say the August payrolls figures have tended to disappoint compared with consensus projections, but they are typically revised higher in ensuing months. Traders estimate the probability of a September rate increase at 32 percent from 54 percent a month ago.

“No one is very sure what to make of the job market report and this means the September rate hike is still in limbo,” Howie Lee, an investment analyst at Phillip Futures Pte in Singapore, said in a note Sept. 7. “Although there were upward revisions to June and July’s figures, having August register below 200,000 jobs may turn out to be a sucker punch for the Fed’s intention to tighten. This may add extra impetus for gold to rise and to continue its position above $1,100.”

Gold last month posted the biggest monthly gain since January as concerns about China’s outlook helped trigger the largest sell-off in global stocks in more than three years. A gathering of Group of 20 finance chiefs Friday and Saturday focused on China’s efforts to shore up its economy. People’s Bank of China Governor Zhou Xiaochuan said in a statement on the bank’s website Saturday that the rout in Chinese equities is close to ending.

Gold futures for December delivery added 0.1 percent to $1,122.30 an ounce on the Comex in New York. Bullion of 99.99 percent purity lost 1.6 percent to 230.60 yuan a gram ($1,126.71 an ounce) on the Shanghai Gold Exchange, the lowest since Aug. 19, before trading at 231.14 yuan.

Silver for immediate delivery added 0.2 percent to $14.6130 an ounce. Platinum rose 0.3 percent to $993.26 an ounce, while palladium advanced 1.4 percent to $583.13 an ounce.