October 7, 2016 / 1:50 PM / a year ago

PRECIOUS-Gold falls to 4-month low, on track for worst week since 2013

* Payrolls data briefly lifts gold
    * Gold in sterling hits three-month high as pound crashes
    * Platinum falls to six-month low
    * GRAPHIC-Gold vs currencies: link.reuters.com/cyv95s

 (Recasts, updates prices; adds comment, second byline, NEW YORK
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, Oct 7 (Reuters) - Gold fell for the ninth
straight session on Friday, briefly tapping a four-month low as
computer-generated selling offset support from weak U.S.
payrolls data, but bullion was on track for its biggest weekly
drop in more than three years.
    A crash in the pound briefly sent gold priced in
sterling to a three-month high. 
    Spot gold was down 0.09 percent at $1,252.71 an ounce
by 3:11 p.m. EDT (1911 GMT), after falling 1 percent to
$1,241.20, the lowest since June 8. It was on track to close the
week down 4.8 percent, its biggest drop since June 2013.
    U.S. gold futures for December delivery settled down
0.1 percent at $1,251.90. 
    Spot gold's fall below the 200-day moving average on
Thursday was "not a good sign," said Bill O'Neill, co-founder of
LOGIC Advisors.
    "There was a lot of algorithm and computer-generated
trading, and that's really was caused all this," he said about
the sudden drop to the session low.
    Gold prices got an initial boost from news that U.S.
employment growth slowed for the third straight month in
September and that the jobless rate rose. The slowdown was not
expected to prevent the Federal Reserve from raising interest
rates later this year, though it curbed speculation about a move
as early as next month. 
    The dollar index is still expected to post its
biggest weekly rise since June this week, based on Monday's
upbeat U.S. jobs and manufacturing report. 
    Gold is highly sensitive to rising U.S. interest rates,
which increase the opportunity cost of holding non-yielding
bullion, while boosting the dollar, in which it is priced.
    "The majority of the move lower (occurred) on Tuesday ...
following hawkish comments by Fed officials ... and a subsequent
break of the psychologically and technically important $1,300
level," Goldman Sachs said in a note.
    "With prices having corrected sharply, we are broadly
neutral on the outlook for gold through year-end, with our
forecast of the probability of U.S. rate hikes through year-end
roughly in line with market expectations."
    Outperforming spot, sterling-denominated gold was
at 1,007.53 pounds an ounce, up 1.3 percent, after surging 6.5
percent to 1,059.06 pounds, its highest since mid-July.
    The pound plunged to a 31-year low in a matter of minutes
overnight in what traders said was a "flash crash." 
    Spot platinum fell as much as 1.8 percent to a
six-month low at $946.40 an ounce.
    Silver was up 0.9 percent at $17.43, while palladium
was 0.42 percent lower at $664.72.

 (Additional reporting by Swati Verma and Nallur Sethuraman in
Bengaluru; Editing by Adrian Croft and Richard Chang)

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