Gold futures dropped to a three-week low the U.S. economy added more jobs in January than forecast, boosting speculation the Federal Reserve will move toward the first interest-rate increase since 2006.
The increase in payrolls capped the biggest three-month gain in 17 years, and workers’ earnings jumped, a government report showed Friday. The dollar headed for the biggest increase in two weeks against a basket of 10 currencies, eroding the appeal of gold as a store of value.
The metal has declined 4.9 percent from a five-month high in January as the U.S. economy gained traction. Global equities rallied this week, damping gold’s allure as an alternative investment.
“Strong jobs numbers and strong wage growth mean the economy is doing well, and that’s not so good for gold,” Chris Gaffney, the senior market strategist at EverBank Wealth Management in St. Louis, said in a telephone interview. “This data is telling us that Fed will be on track to raise rates in June.”
Gold futures for April delivery fell 1.5 percent to $1,243.30 an ounce at 9:33 a.m. on the Comex in New York. Earlier, the price touched $1,237.30, the lowest for a most-active contract since Jan. 15.
via Bloomberg
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