Despite gains throughout the month, gold slid Wednesday, wiping out this month’s gains as hints of a stronger U.S. labor market and a rally in equities curbed demand for safe haven assets.
Friday’s unemployment numbers should show a definite increase with companies taking on 200,000 workers in March, beating an expected forecast of 195,000 and adding to evidence of a firming labor market. Stocks around the world advanced and oil gained for the first time in five days.
According to Michael Smith, the president of T&K Futures & Options Inc. in Port St. Lucie, Florida, “It really looks like gold has topped out. Any good economic news is going to be bad for gold.”
Gold Futures Down
Gold futures for June delivery declined 0.7 percent to settle at $1,228.60 an ounce at 1:45 p.m. on the Comex in New York. On Tuesday, prices gained 1.3 percent, the biggest advance since March 17, following Federal Reserve Chair Janet Yellen’s assurance of a gradual approach to raising interest rates. Prices are down 0.5 percent this month.
Jeffrey Christian, the New York-based managing partner at CPM forecasts that spot prices, which traded at $1,227.22 Tuesday, will drop to $1,130 by September as the rally in the Standard & Poor’s 500 Index sends encouragement to investors on the state of the U.S. economy.
Gold continues to be the year’s best performing commodity responding to the Fed reluctance to tighten interest rates in order to protect the recovery in the world’s largest economy. Future prices indicate that there will be no chance of a change in policy next month and only a 47 percent likelihood of an increase by November.
