Gold Drops a Second Day as Dollar Strengthens Before Jobs Data

Gold futures dropped a second day as the dollar strengthened before U.S. jobs data that may add to the case for policy makers to raise interest rates. The Bloomberg Dollar Spot Index reached a five-year high before a report that economists predict will show U.S. job growth quickened. The greenback has rallied on expectations an improving U.S. economy will spur the Federal Reserve to raise borrowing costs, while other central banks weigh more stimulus. The dollar and gold fell yesterday as European Central Bank President Mario Draghi said policy makers will wait to assess whether additional stimulus is needed, though ruled out buying bullion. Gold is still up 2 percent in New York this week, the most since October, and set for the biggest advance since June in London after surging on Dec. 1 as oil prices rebounded. “All eyes today will be on the release of the monthly employment report in the U.S.,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a note today. “If the data paints a positive picture of the labor market, the dollar is likely in the coming sessions to extend gains” and pressure gold, he said. Gold for February delivery fell 0.7 percent to $1,199.40 an ounce by 7:11 a.m. on the Comex in New York. Bullion for immediate delivery lost 0.5 percent to $1,199.16 in London, according to Bloomberg generic pricing. Spot prices climbed 2.7 percent this week. Futures trading volume on the Comex was 39 percent below the 100-day average for this time of day, data compiled by Bloomberg show. Holdings in gold exchange-traded products fell to a five-year low as of yesterday, data compiled by Bloomberg show. A stronger dollar and higher U.S. interest rates reduce gold’s allure because the metal generally offers investors returns only through price gains. U.S. Jobs U.S. employers probably added 230,000 workers in November after hiring 214,000 the previous month, according to economists surveyed by Bloomberg News before today’s jobs report. Silver for delivery in March fell 1.2 percent to $16.375 an ounce in New York, cutting this week’s gain to 5.3 percent, the most since June. Platinum for January delivery slid 0.9 percent to $1,234.70 an ounce. Palladium for March delivery was little changed at $802.95 an ounce. Platinum and palladium are mostly used in catalytic converters to curb harmful emissions from cars. Passenger-vehicle sales in China rose 5 percent in November, compared with a 9.3 percent increase the previous month, the Passenger Car Association said today. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net John Deane, Nicholas Larkin

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