Gold Trades Above Three-Week Low in London Before U.S. Jobs Data

London (Nov 8)   Gold traded above a three-week low in London on speculation lower prices may spur physical demand and as investors weighed the outlook for U.S. stimulus before jobs data is released.

Bullion fell to $1,296.13 an ounce yesterday, the lowest since Oct. 17. The Bloomberg U.S. Dollar Index, a measure against 10 major currencies, jumped to a seven-week high yesterday as the European Central Bank cut interest rates and data showed the U.S. expanded more than forecast. The gauge was steady today as Standard & Poor’s downgraded France and before data expected to show U.S. employers added fewer jobs last month.

Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation a strengthening economy will spur the Federal Reserve to slow its $85 billion in monthly debt purchases. The Fed will start cutting bond buying in March, an Oct. 17-18 Bloomberg survey of economists showed.

“It’s all been dollar driven and there were some positive signs of a U.S. recovery,” Bernard Sin, head of currency and metal trading at bullion refiner MKS (Switzerland) SA in Geneva, said today by phone. “There’s definitely bargain hunting around that’s physical related. Intraday trading might be volatile” until the U.S. jobs data later today, he said.

Gold for immediate delivery added 0.3 percent to $1,311.29 by 9:32 a.m. in London. Prices slipped 0.4 percent this week. Bullion for December delivery increased 0.2 percent to $1,310.50 on the Comex in New York. Futures trading volume was 53 percent below average for the past 100 days for this time of day, data compiled by Bloomberg showed.

Jobs Data

U.S. nonfarm payrolls rose by 120,000 last month after a 148,000 gain in September, a Bloomberg News survey of economists indicated before today’s Labor Department data.

“We expect relatively subdued trading” before the U.S. jobs data, analysts at Australia & New Zealand Banking Group Ltd. including Victor Thianpiriya wrote in a note today. “A print above the market’s median expectation of 120,000 will likely see expectations for Fed tapering pulled forward.”

Silver for immediate delivery added 0.2 percent to $21.716 an ounce in London, after falling to a three-week low of $21.4015 yesterday. Palladium rose 0.1 percent to $762.58 an ounce, near the level of $765.04 reached Nov. 6 that was the highest since Aug. 16. Platinum rose 0.4 percent to $1,459.70 an ounce.

South Africa’s National Union of Mineworkers said members rejected a revised pay proposal at Northam Platinum Ltd. this week. The strike that began Nov. 3 continues, said Ecliff Tantsi, the union’s negotiator at Northam. South Africa accounts for about 72 percent of platinum mine supply and about 36 percent of palladium output, according to Barclays Plc.