Metals: Gold Erases Gains on Positive Jobs Data

By Stephanie Yang and David Hodari Features Dow Jones Newswires

Gold prices erased gains on Friday after U.S. jobs data showed stronger-than-expected employment in April.

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Gold for June delivery was recently down 0.1% at $1,227.20 a troy ounce on the Comex division of the New York Mercantile Exchange, reversing course after edging higher earlier in the session.

The U.S. economy added 211,000 jobs in April, exceeding economist expectations of 188,000. The unemployment rate fell to 4.4%, the lowest level since May 2007. The strong data reinforced beliefs among traders that the Federal Reserve will raise interest rates at the coming June meeting.

"Overall there's nothing in this report that would make the Fed think twice about a June hike," said Tai Wong, head of metals trading at BMO Capital Markets.

According to the CME's FedWatch tool, 78.5% of traders expect the Fed to raise rates in June. Higher rates tend to weigh on gold, which accumulates no interest and struggles to compete with yield-bearing assets when borrowing costs rise.

Gold has sold off in recent sessions as the market increasingly expects higher interest rates in the coming months. Prices are on track to close at the lowest level since March 15.

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Meanwhile, copper futures for July delivery gained 0.1%, to $2.5140 a pound, in New York.

Base metals prices, particularly copper, received heavy blows Wednesday and Thursday after weak Chinese manufacturing purchasing managers index data and leaping global copper inventories combined with fears about Chinese industrial demand to drag on steel prices and the rest of the industrial metals complex by proxy.

"It may be that the inflow pressure has run its course for the moment," FastMarkets' William Adams said. "I think prices will consolidate, unless we see even more stocks piling in next week.

Write to Stephanie Yang at stephanie.yang@wsj.com and David Hodari at david.hodari@wsj.com

Gold prices fell to a one-month low Friday after U.S. jobs data showed stronger-than-expected employment in April.

Gold for June delivery settled down 0.1% at $1,226.90 a troy ounce on the Comex division of the New York Mercantile Exchange, reversing course after edging higher early Friday morning.

The U.S. economy added 211,000 jobs in April, exceeding economist expectations of 188,000. The unemployment rate fell to 4.4%, the lowest level since May 2007. The strong data reinforced beliefs among traders that the Federal Reserve will raise interest rates at the coming June meeting.

"Overall there's nothing in this report that would make the Fed think twice about a June hike," said Tai Wong, head of metals trading at BMO Capital Markets.

According to the CME's FedWatch tool, 83% of traders expect the Fed to raise rates in June. Higher rates tend to weigh on gold, which accumulates no interest and struggles to compete with yield-bearing assets when borrowing costs rise.

Gold has sold off in recent sessions as the market increasingly expects higher interest rates in the coming months. Prices are on track to close at the lowest level since March 15. Prices closed at the lowest level since March 15. Silver prices have been hit hard as well, with futures for July delivery falling for nine consecutive sessions, closing at the lowest since December 30.

Meanwhile, copper futures for July delivery bounced back from recent losses, settling up 0.7% to $2.5285 a pound in New York.

Base metals prices, particularly copper, received heavy blows Wednesday and Thursday after weak Chinese manufacturing purchasing managers index data and leaping global copper inventories combined with fears about Chinese industrial demand to drag on steel prices and the rest of the industrial metals complex by proxy.

"It may be that the inflow pressure has run its course for the moment," FastMarkets' William Adams said. "I think prices will consolidate, unless we see even more stocks piling in next week."

Write to Stephanie Yang at stephanie.yang@wsj.com

(END) Dow Jones Newswires

May 05, 2017 15:10 ET (19:10 GMT)