Gold in worst weekly slump since 2004 before US payrolls data

[NEW YORK] Gold held a weekly decline marking its worst run in 11 years before a US payrolls report that will guide the Federal Reserve in determining when to raise interest rates.

Bullion for immediate delivery was at US$1,088.91 an ounce by 9:31 am in Singapore from US$1,089.55 on Thursday, when prices gained 0.4 per cent, according to Bloomberg generic pricing. The metal is 0.6 per cent lower this week and is headed for a seventh weekly drop in the worst slump since 2004.

Gold tumbled to a five-year low on July 24 on speculation that improving US growth will lead policy makers to raise rates as early as September, curbing bullion's appeal because it doesn't pay interest. The payrolls report will follow data Thursday that showed jobless claims near a four-decade low. Traders are pricing in a 48 per cent probability that the Fed will raise interest rates in September.

"Traders were cautious ahead of tonight's US employment report," Victor Thianpiriya, a Singapore-based analyst at Australia & New Zealand Banking Group Ltd, said in a report.

Volume on the Comex in New York so far in August, already a slow time of year, has dropped about 8 percent from 2014. With fewer participants, the metal's 60-day historical volatility has tumbled to its lowest level in nine months.

Gold may fall below US$1,000 and average US$1,110 this year, Natixis Commodity Markets Ltd said in a report. It forecasts the metal to average US$950 an ounce in 2016.

The Bloomberg Dollar Spot Index tracking the greenback against 10 major currencies slipped 0.1 per cent Thursday after closing at the highest level since March. The gauge surged 19 per cent in the past year while bullion retreated 17 per cent.

The US government's payrolls report on Friday is projected to show employers took on 225,000 workers last month, while the jobless rate is seen holding at a seven-year low of 5.3 per cent, according to the median estimate in a Bloomberg survey. That compares with 223,000 hires in June and supports the case for higher rates.

Gold futures for December delivery lost 0.2 per cent to US$1,088.20 an ounce on the Comex in New York. Silver for immediate delivery was little changed at US$14.6735 an ounce.

Platinum was little changed at US$952.15 an ounce, while palladium gained 0.1 per cent to US$600.60 an ounce. Both metals reached multiyear lows on Tuesday, with platinum sinking to a six-year low of US$945.24 and palladium to US$589.10, the lowest price since October 2012.

BLOOMBERG