Gold Reverses Gains on US Jobless Data, Platinum Gains

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Prices of gold fell today as the dollar gauge climbed to healthy territory, after a closely tracked US jobless report almost met expectations, showing that hiring soared in May.

Spot prices for gold plunged 0.4% at $1,247.84 per ounce as of 1354 GMT, from the $1,257.50 mark it hit earlier. August-delivery contracts sank $5.30 per ounce at $1,248.

Traders had paused taking new stances before the jobless data after gold saw a rally of almost 1% in the previous session following pronouncements by the European Central Bank that it would inject stimulus into the economy.

The ECB announced a four-year stimulus program worth 400 billion euro ($545 billion), which gives banks that have been withholding credit a reason to lend more to businesses.

“After weeks of lackluster trading, the gold community was anticipating a bit more action following the U.S. nonfarm payrolls data. The sellers seem exhausted and the buyers seem to be sitting on their hands and waiting,” Vedant Mimani of the Atyant Capital Global Opportunities Fund told MarketWatch.

Growth in new US jobs from February to April registered the most impressive three-month rally in two years, which appeared to stretch to May, with last month’s data showing an addition of 217,000. Analysts expected nonfarm jobs to add 210,000 in May.

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Gold has a tendency to take advantage of extra-loose monetary policy, whose effect is to remove the opportunity cost for keeping non-yielding investments, including the bullion.

Platinum was among precious metals that soared. The metal was up after president of South Africa’s AMCU union said that its demand for 12,500 rand or $1,200 per month was not open to talks, hurting prospects of a quick end to the five-month strike, according to Reuters.

Spot platinum climbed 0.5% at $1,444 per ounce.

Spot palladium jumped 0.8% to exchange at $843.25 per ounce.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com