Gold Futures Fall as Signs of Improving U.S. Growth Crimp Demand

Apr 03, 2014 2:32 pm ET

April 3 (Bloomberg) -- Gold futures fell for the sixth time in seven sessions as signs of quickening U.S. economic growth bolster forecasts for the Federal Reserve to boost interest rates, crimping demand for the metal as a store of value.

U.S. payrolls may have risen by 200,000 in March, the most since November, based on a Bloomberg survey of economists ahead of government data tomorrow. Service industries expanded at a faster pace in March, the Institute for Supply Management said today. Gold has fallen 4.2 percent since March 19, when Fed Chair Janet Yellen said the central bank may end bond buying this fall and increase borrowing costs six months after that.

“The economy is definitely improving, and the payrolls number is very important for the gold market,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview. “The safe-haven status is disappearing.”

Gold futures for June delivery fell 0.5 percent to settle at $1,284.60 an ounce at 1:52 p.m. on the Comex in New York. On April 1, the metal touched $1,277.40, the lowest for a most- active contract since Feb. 11.

Last year, gold tumbled 28 percent, the most since 1981, amid a U.S. equity rally to a record and concern that the Fed would slow the pace of monetary stimulus. The metal jumped 70 percent from December 2008 to June 2011 as the central bank pumped more than $2 trillion into the financial system and cut interest rates to a record in a bid to boost the economy.

Mine Strike

On the New York Mercantile Exchange, platinum futures for July delivery gained 0.5 percent to $1,445.50 an ounce. The price climbed for the fifth straight session, the longest rally since Feb. 14.

Palladium futures for June delivery climbed 0.1 percent to $788.85 an ounce. This year, the price has climbed 9.8 percent, topping gains among precious metals.

More than 70,000 members of the Association of Mineworkers and Construction Union have been on strike since Jan. 23 at mines in South Africa, the world’s top platinum producer.

The leaders of Lonmin Plc and the union debated before hundreds of miners at a Johannesburg rally today, the first such display since the start of the strike that crippled output.

The Association of Mineworkers and Construction Union led more than 70,000 workers on strike in South Africa since Jan. 23 at mines of the biggest platinum producers. The leaders of Lonmin Plc and its main union debated head to head in front of hundreds of miners at a Johannesburg rally today.

Lonmin, Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd. have issued notices saying that they probably won’t fulfill some supply contracts because of the strike.

Silver futures for May delivery fell 1.2 percent to $19.805 an ounce on the Comex.