Gold Futures Drop as Payrolls in U.S.

Gold slumped after the U.S. added the largest number of jobs in almost three years, fueling concern that the Federal Reserve will move closer to raising interest rates. Silver declined. Prices for gold options betting on a rally tumbled, and the metal’s 60-day historical volatility climbed to the highest since March. The dollar rose to the highest since 2009 against a basket of currencies, cutting the appeal of bullion as an alternative asset. Futures fell to a four-year low last month on waning demand for the metal as a store of value. Employers in the U.S. added 321,000 jobs in November, the most since January 2012. The report boosted speculation that Fed policy makers will be assured the economy is strong enough to withstand an increase in borrowing costs next year. “A selloff in gold is inevitable with these kind of numbers,” Chris Gaffney, the senior market strategist at EverBank Wealth Management in St. Louis, said in a telephone interview after the report. “This tells us rates will rise sooner rather than later.” Gold futures for February delivery dropped 1.4 percent to settle at $1,190.40 an ounce at 1:49 p.m. on the Comex in New York. Prices touched $1,130.40 on Nov. 7, the lowest since 2010. The outlook for higher interest rates erodes the allure of the metal, which generally offers investors returns through increasing prices. Holdings in global exchange-traded funds backed by bullion are at the lowest since 2009, heading for a seventh straight week of declines. Investor demand for precious metals has waned amid a rally for equities and the dollar and as inflation remained low. By Debarati Roy