Gold and silver futures tumbled the most in seven weeks after employment in the U.S. increased more than forecast in May, boosting concern that the Federal Reserve may scale back monetary stimulus.
Payrolls rose 175,000 after a revised 149,000 increase in April that was smaller than estimated, Labor Department data showed today. The median forecast in a Bloomberg survey called for a 163,000 gain. Gold has dropped 17 percent this year, entering a bear market in April as economic optimism increased speculation that the Fed may slow its $85 billion of monthly debt purchases.
“Today’s data is telling people that the economy is improving, and that worries gold investors that the Fed may talk about tapering the stimulus,” Tom Power, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Some worry that the stimulus may end later this year.”
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Gold futures for August delivery fell 2.3 percent to settle at $1,383 an ounce at 1:42 p.m. on the Comex in New York. That marked the largest decline for a most-active contract since April 15, when the metal capped a two-day plunge of 13 percent that was the biggest in three decades.
Alan Greenspan, a former Fed chairman, said on CNBC television today that the central bank needs to begin cutting back on its unprecedented asset purchases and move toward stopping them altogether.
Holdings in global exchange-traded products backed by gold yesterday fell 4.7 metric tons to 2,137.1 tons, the lowest since May 2011, according to data compiled by Bloomberg. The assets have dropped 19 percent this year some investors lost faith in the metal as a store of value.
Silver futures for July delivery fell 4.2 percent to $21.743 an ounce on the Comex, the biggest drop since April 15. This year, the metal has The metal has plummeted 28 percent, the most among 24 raw materials in the Standard & Poor’s GSCI Spot Index.
Trading doubled compared with the average in the past 10 days for this time, according to Bloomberg data.
On the New York Mercantile Exchange, platinum futures for July delivery declined 1.7 percent to $1,502.60 an ounce, the biggest drop since May 21.
Yesterday, the price reached $1.534.50, the highest since April 12, partly amid labor strife at some South African mines.
Palladium futures for September delivery fell 0.1 percent to $761.20 an ounce on the Nymex. The price has climbed 8.2 percent this year on concern that global supplies may lag behind demand.
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