Gold futures on the COMEX Division of the New York Mercantile Exchange settled at the lowest level in nearly three weeks on Wednesday, as stronger-than-expected U.S. private sector employment data fueled investors’ confidence in the U.S. economic recovery, eroding the demand for gold as a safe- haven.
The most active gold contract for February delivery dropped 5.1 dollars, or 0.4 percent, to 1,373.7 dollars per ounce.
The December reading from Automatic Data Processing released on Wednesday showed U.S. employers added 297,000 jobs in December, nearly three times the analysts’ forecast of 100,000 jobs.
A trader noted that the precious metal extended sell-off in the early session on Wednesday, as the upbeat jobs data encouraged investors to stay away from safe-haven assets and rush into stocks. Meanwhile, some short-term investors and hedge funds also locked in 2010 gains.
The gold price registered a 3.1-percent loss in the previous session, which was the biggest one-day drop for the precious metal since July 2010, shedding more than 44 dollars per ounce.
Another trader said that upbeat economic data released recently signaled that the global and U.S. economy is gaining some momentum, making investors feel less of a need for new safe-haven bets. Meanwhile, an increase in the purchasing power of the dollar also eroded the appeal of the precious metal as an alternative asset.