Gold drops B400 on rosy US data

Gold prices fell by 400 baht per baht weight on Saturday.

Less activity is expected in Bangkok's Yaowarat now that the world's largest economy added more jobs in January than forecast, boosting speculation that the Federal Reserve will move toward the first interest-rate increase since 2006. (Bangkok Post file photo)

The Gold Traders Association announced the buying price at 19,050 baht and the selling price at 19,150 baht per baht-weight for gold bars.

The Gold Traders Association announced the buying price at 19,050 baht and the selling price at 19,150 baht per baht-weight for gold bars.

The buying price for gold ornaments was 18,768.08 while their selling price was 19,550 baht per baht-weight.

The prices were adjusted once at opening on Friday, down 50 baht from the previous close on Thursday.  

In world markets, Bloomberg reported from New York on Saturday gold and silver futures dropped to three-week lows as the US economy added more jobs in January than forecast, boosting speculation that the Federal Reserve will move toward the first interest-rate increase since 2006.

The increase in payrolls capped the biggest three-month gain in 17 years, and workers’ earnings jumped, a government report showed on Friday. The dollar headed for the largest gain since October against a basket of 10 currencies, eroding the appeal of the precious metals as a store of value.

Gold has declined 5.6% from a five-month high in January as the US economy gained traction, with futures on Friday trading below the 200-day moving average. Global equities rallied this week, damping the metal’s allure as an alternative investment.

“The US economic strength is hurting gold,” Charlie Bilello, the director of research who helps oversee $220 million of assets at New York-based Pension Partners, said in a telephone interview. “People are betting on a rate hike in June, and the dollar strength makes gold unattractive.”

Gold futures for April delivery fell 2.2% to settle at $1,234.60 an ounce at 1.51pm on the Comex in New York. Earlier, the price touched $1,228.20, the lowest for a most-active contract since Jan 15. The precious metal dropped 3.5% this week.

“Strong jobs numbers and strong wage growth mean the economy is doing well, and that’s not so good for gold,” Chris Gaffney, the senior market strategist at EverBank Wealth Management in St. Louis, said in a telephone interview.

In January, gold gained 8% as central banks in Asia and Europe announced stimulus measures, while speculation increased that the Fed would wait longer to raise rates because of slowing foreign economies.

In 2014, the metal posted a consecutive annual decline for the first time since 1998 amid a surge in equities and muted inflation.

Gold climbed 70% from December 2008 to June 2011 as central banks increased money supply on an unprecedented scale, spurring concerns that inflation would accelerate.

The China Gold Association said on Friday that the nation’s demand declined to 886.1 tonnes last year from a record 1,176.4 tonnes in 2013.

The price touched $16.545, the lowest since Jan 12.