U.S. jobs report dents gold price

A relatively rosy U.S. jobs report released this morning by a private human resources consultancy had gold heading for its biggest loss in a week as speculation once again emerged among bullion investors of a U.S. interest rate hike this fall.

The report by ADP Research Institute showed the American economy gaining 190,000 jobs in U.S. nonfarm private sector employment – considered a bellwether of the economy as a whole. The numbers for August were up from July, when the non-farm payroll grew by 177,000 jobs.

As of lunchtime on the West Coast, the spot price was down by $6.37 to $1,134.02 an ounce. Gold futures for December delivery were off by half a percent to $1,133.70 late morning on the Comex in New York. After gaining for four straight days, gold was also hurt by a 0.5 percent rise in the U.S. dollar index and a rebound in stock markets.

According to Bloomberg, the decline in gold futures is the biggest drop since August 26. Interest in paper gold – the metal as sold through ETFs – is also waning, with assets in exchange-traded products dropping on Tuesday by 6.9 tonnes to 1,522.7 tonnes, the biggest decline since July 31, the news outlet stated.

Meanwhile some better news for the yellow metal came on Wednesday from top gold-consuming nations India and China. The FT reports that the gold market in London is showing increasing demand from dealers needing gold to deliver to refineries in Switzerland, before being melted down and sent to other markets like India.

“[The rise] does indicate there is physical tightness in the market for gold for immediate delivery,” the FT quotes Jon Butler, an analyst at Mitsubishi. The newspaper also quotes Capital Economics as saying that Chinese gold imports via Hong Kong and Switzerland also showed strength in July compared to a weak June, driven by weak gold prices which fell in July to their lowest level in five years.

Gold market watchers will be following closely what happens on Friday when more non-farm U.S. payroll data is released.