Gold falls to 2-week low ahead of USA jobs data

LONDON-Gold prices were lower on the London spot market Thursday, after stronger-than-expected US employment data supported the likelihood of a USA interest rate rise before year-end.

US and European stock markets sank in response to the drastically poorer than expected U.S.jobs numbers, while the dollar fell to a two-week low against the euro on expectations the Fed will hold off raising interest rates until early next year.

‘We are not bullish on gold due to structural headwinds, decreasing demand and the increasing opportunity costs of holding it. Gold is dollar-denominated, and therefore becomes more expensive as the greenback strengthens, and we expect this to continue.

The heavy losses suffered by platinum have widened the price differential between gold and platinum to over $220 per troy ounce, its highest level since exchange trading of platinum began in 1987, since which time platinum has generally been more expensive than gold. “Lower lows and lower highs over those days make for a short term bearish trend”, technical analysts at ScotiaMocatta said.

As a result, market attention will likely be on speeches being by members of the Fed Wednesday, “in the hope of receiving a few indication of when the Fed might hike interest rates”, said Commerzbank.

The United States central bank has said the timing of a rate hike would be data dependent.

The US Labour Department reported on Friday the USA economy added 142,000 jobs in September, well below the market estimate of 200,000. While petrol engines use palladium-based autocatalysts in their exhaust cleaning systems, diesel engines opt for platinum catalysts.

THE metal has been hit by last week’s revelations that Volkswagen AG falsified U.S. vehicle emission tests, which a few believe could affect demand for diesel cars. It has also benefited from views that demand for gasoline cars would increase after Volkswagen’s scandal.

Decent volume in November and December put options, which give the holder the right to sell at a strike price of $1,100 an ounce, suggested investors were protecting their downside risk and hedging their new long futures positions, traders said.

Among other metals, silver for December delivery dropped 57.3 cents, or 3.79 percent, to close at United States dollars 14.538 per ounce.

Gold fell for a fourth day after USA consumer confidence unexpectedly rose, building the case for an interest rate increase this year.

Spot palladium was up 1.3% at $659.22 an ounce.