Gold, Silver Post Longest Slumps Since November on Dollar, Jobs

Jan 08, 2014 3:14 pm ET

Jan. 8 (Bloomberg) -- Gold and silver fell, capping the longest slumps since late November, as the dollar extended gains and better-than-expected U.S. jobs data boosted the case for the Federal Reserve to reduce stimulus.

The greenback rose to a four-month high against a basket of 10 major currencies. The ADP Research Institute said today that payrolls jumped by 238,000 last month. The median forecast of 36 economists surveyed by Bloomberg called for a 200,000 advance.

“U.S. data is really diminishing the need for gold as a safe-haven asset,” Adam Klopfenstein, a senior market strategist at Archer Financial Services in Chicago, said in telephone interview. “The dollar strength is working against the precious metals.”

Gold futures for February delivery declined 0.3 percent to settle at $1,225.50 an ounce on the Comex in New York. The price dropped for the third straight day, the longest slump since Nov. 27.

After the settlement, the price touched $1,217.70, the day’s low, as the minutes of the Federal Reserve meeting last month showed officials cited diminishing benefits from stimulus and the potential “excessive risk-taking in the financial sector.”

The Fed said Dec. 18 on it would trim monthly bond purchases to $75 billion from $85 billion starting this month.

In 2013, gold tumbled 28 percent, the most since 1981 and the first annual drop since 2000. Some investors lost faith in the metal as a store of value amid a U.S. equity rally to a record and muted inflation.

Silver futures for March delivery fell 1.3 percent to close at $19.539 an ounce on the Comex. The price dropped for the third straight day, the longest slump since Nov. 22.

On the New York Mercantile Exchange, palladium futures for March delivery declined 0.5 percent to $738.30 an ounce. The metal climbed in the previous five sessions, the longest rally since Oct. 22.

Platinum futures for April delivery slid 0.1 percent to $1,414.20 an ounce.

--With assistance from Nicholas Larkin in London. Editors: Patrick McKiernan, Joe Richter