Gold price drops on stronger US jobs data

Gold prices dropped more than 1.5% on Friday — on track for a third straight weekly decline — as investors grew more hopeful of a near-term economic rebound following stronger-than-expected US non-farm payroll data reported for the month of May.

An increase of 2.5 million jobs versus an anticipated decline of 7.5 million incited expectations of recovery in the world’s no.1 economy, eroding the investment appeal of safe-haven assets such as gold.

Spot gold fell 1.9% to $1,680.52 per ounce by 12:30 pm ET. Gold futures also took a hit on the Comex in New York, down 2.4% to $1,679.80.

Bullion has declined 1.2% so far this week, on pace for its biggest weekly loss since the week ending May 1.

Pressure was already on gold Thursday when the European Central Bank approved a larger-than-expected expansion of its stimulus package, boosting investor confidence in riskier assets. Meanwhile, stock indices worldwide kept close to their three-month highs.

“The European Central Bank’s move yesterday is supporting risk-taking …. It seems more investors holding gold are switching out to the equity market,” UBS analyst Giovanni Staunovo told Reuters.

Bullion was also being pressured by stronger yields and a slightly firmer dollar, which meant the “opportunity cost to hold gold in the portfolio has gone up,” Bart Melek, head of commodity strategies at TD Securities, said in an interview with CNBC.

“Gold prices have levelled off in the past few weeks … We see $1,670 per ounce as the key support and $1,750 as key resistance, (a) break on either side will provide a clear guidance,” said ANZ commodity strategist Soni Kumari.

Elsewhere, palladium rose 2.6% to $1,989 an ounce, while platinum fell 3.1% to $814 an ounce.

Silver was down 2.0% to $17.36 per ounce, on track for its first weekly decline over a five-week period.