Gold Futures Advance in New York as American Earnings Decline

New York (Jan 9)  Gold futures rose in New York after a government report showed American earnings unexpectedly declined in December, even as payrolls increased.

Average hourly earnings for all employees in December dropped by 0.2 percent from the prior month, the biggest since comparable records began in 2006, to $24.57. Employment rose more than forecast, and the jobless rate declined to 5.6 percent.

“While the employment numbers are very good, there is a drop in earnings, so deflation worries remain, and therefore the Fed may be forced to hold rates,” Chris Gaffney, the senior market strategist at EverBank Wealth Management in St. Louis, said in a telephone interview. “There is no wage inflation as of now.”

In 2014, the precious metal posted a consecutive annual decline for the first time since 1998 amid a surge in equities and muted inflation. Minutes of the Federal Reserve’s last meeting that were released this week signaled the bank is on course for the first interest-rate increase since 2006, diminishing demand for gold as a store of value.

Gold futures for February delivery gained 0.4 percent to $1,213.80 an ounce at 8:39 a.m. on the Comex in New York.

Prices climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent in a bid to shore up economic growth. The metal dropped 1.5 percent last year, and 28 percent in 2013, ending a 12-year bull run.

Holdings in the SPDR Gold Trust, the world’s largest exchange-traded fund backed by the metal, are at the lowest since September 2008.

Source: Bloomberg