Dec. 3 (Bloomberg) -- Gold retreated to the lowest since July on speculation that the Federal Reserve will start slowing the pace of monetary stimulus on signs of an improving U.S. economy.
U.S. manufacturing grew at the fastest pace in more than two years last month, an Institute of Supply Management report showed yesterday. American payrolls probably increased by 181,000 in November, according to a Bloomberg survey before the Labor Department report on Dec. 6. Fed policy makers signaled Nov. 20 that the labor market will improve enough to warrant slowing their $85 billion of monthly bond purchases.
“People don’t want to own gold when the chatter about tapering is getting louder,” Frank Lesh, a trader at FuturePath trading in Chicago, said in a telephone interview. “We are seeing some kind of improvement in the economic environment.”
Gold futures for February delivery fell 0.1 percent to settle at $1,220.80 an ounce at 1:46 p.m. on the Comex in New York, after reaching $1,214.60, the lowest since July 8.
Prices pared losses after a weaker dollar and higher oil prices provided support, Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said in a telephone interview from Chicago. The Bloomberg U.S. Dollar Index dropped as much as 0.4 percent today, while crude futures in New York gained as much as 2.5 percent.
Bullion has lost 27 percent this year. Some investors lost faith in the precious metal as a store of value amid an equity rally and low inflation. Monthly job growth is averaging 186,300 this year, the most since 2005, data compiled by Bloomberg show.
Silver futures for March delivery fell 1.2 percent to $19.065 an ounce. Earlier, prices dropped to $18.975, the lowest since July 9.
On the New York Mercantile Exchange, platinum futures for January delivery gained 0.7 percent to $1,355.80 an ounce. Palladium futures for March delivery added 0.2 percent to $714.80 an ounce.
--With assistance from Phoebe Sedgman in Melbourne and Glenys Sim in Singapore. Editors: Thomas Galatola, Millie Munshi