Gold Falls for First Timee in Seven Sessions on Jobs Data

June 26, 2014

Washington (June 26)  Gold futures fell for the first time in seven sessions as fewer Americans filed applications for unemployment benefits last week, crimping demand for the precious metal as alternative investment.

Jobless claims fell to a one-month low of 312,000 in the week ended June 21, government data showed. Through yesterday, the Standard & Poor’s 500 Index of equities rose 23 percent in the past 12 months, while gold climbed 3.7 percent as the Federal Reserve tapered monetary stimulus amid gains in the labor market.

“People are not rushing to gold as the economy is showing some signs of improvement,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview. “Also, equities are winning all the money because they continue to rise higher.”

On the Comex in New York, gold futures for August delivery dropped 0.5 percent to $1,315.40 an ounce at 9:07 a.m.. On June 24, the price reached $1,326.60, the highest for a most-active contract since April 15.

With gold close to a two-month high, physical demand “remains lacking,” Australia & New Zealand Banking Group Ltd. said in a note.

Gold headed for the second straight quarterly gain, the longest rally since 2011, as mounting tensions in Iraq and Ukraine spurred demand for a haven. The price rose 6.8 percent in the three months ended March 31, partly on concern that the U.S. economy was stalling.

China Audit

China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions in another sign of possible fraud in commodities financing deals.

In China, 25 gold processors made a combined profit of more than 900 million yuan from the loans, according to a report on the National Audit Office’s website. Authorities are also probing alleged fraud at Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as collateral for loans.

“If China continues to clamp down on these financing deals, it would likely be negative for the gold price in the short run,” Jens Naervig Pedersen, a Copenhagen-based commodity analyst at Danske Bank A/S, said in an e-mail. “More gold will be available on the market and less demand for gold from these financing deals.”

China is the world’s biggest producer and consumer of gold.

Silver futures for September delivery fell 0.4 percent to $20.095 an ounce on the Comex. On June 24, the price reached $21.225, the highest since March 18. Trading doubled compared with the average for the past 100 days for this time, according to data compiled by Bloomberg.

On the New York Mercantile Exchange, platinum futures for October delivery dropped 0.4 percent to $1,469 an ounce.

Palladium futures for September delivery fell 0.1 percent to $832.50 an ounce.

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