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Gold Set for the Longest Losing Run Since 2009 on U.S. Recovery

Spot gold dropped for a fifth day, the longest losing streak since August 2009, as signs that the U.S. economy is recovering boosted the dollar and curbed demand for a haven. Silver, platinum and palladium all declined.

Immediate-delivery bullion lost as much as 0.3 percent to $1,367.53 an ounce and was at $1,369.30 at 2:57 p.m. in Seoul. The price has tumbled 3.6 percent this week, set for the biggest weekly loss since May, after advancing 30 percent in 2010. The February-delivery contract declined 0.2 percent to $1,369.30 an ounce on the Comex in New York.

Fewer Americans filed claims for unemployment-insurance payments in the past four weeks, and a report today may show U.S. payrolls rose for a third month. The dollar advanced for a fifth day against a basket of six major counterparts. Gold typically moves inversely to the greenback.

“We will see some weakness in gold prices in the short term because we are seeing signs that the U.S. economy is certainly in some form of improving trend,” David Lennox, a resource analyst at Fat Prophets, said from Sydney today. Spot gold reached a record $1,431.25 an ounce on Dec. 7.

Eleven of 20 traders, investors and analysts surveyed by Bloomberg, or 55 percent, said that the precious metal will decline next week. Eight predicted higher prices, while one was neutral, according to the survey.

Demand ‘Is Shrinking’

“Demand from the safe-haven gold community is shrinking,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “In the short term, I expect that prices will weaken due to a stronger U.S. dollar.”

Gold assets in exchange-traded products, or ETPs, fell 0.13 metric ton to 2,091.65 tons yesterday, declining for a third day, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,114.6 tons on Dec. 20.

“Today’s U.S. non-farm payrolls will be crucial for the near-term precious metals outlook,” Tobias Merath, an analyst at Credit Suisse Group AG, wrote in a report today.

The median forecast in a Bloomberg News survey calls for a 150,000 gain in jobs last month. That’s up from 135,000 before a Jan. 5 report from ADP Employer Services that showed companies added almost three times as many jobs as economists had forecast.

The U.S. employment data, due at 8:30 a.m. in Washington, will be out one hour before Federal Reserve Chairman Ben S. Bernanke is scheduled to testify before the Senate Budget Committee on monetary and fiscal policy and the economic outlook.

‘More Upbeat’

“America’s economic outlook is getting more upbeat,” said Marito Ueda, senior managing director at FX Prime Corp., a foreign-exchange margin company in Tokyo. “The dollar is likely to strengthen further.”

The Commodity Futures Trading Commission will consider a plan next week to curb speculation in raw materials including gold, oil and wheat as part of the most sweeping rewrite of Wall Street rules since the 1930s, the Washington-based agency said yesterday. The top U.S. commodity regulator will discuss position-limit rules at its next meeting on Jan. 13, it said.

Cash silver fell as much as 0.7 percent to $28.8750 an ounce and was at $28.9825. The metal is down 6.3 percent this week after jumping 83 percent in 2010. Silver assets in ETPs fell 25.16 tons to 15,080.07 tons, data from four providers show.

Immediate-delivery palladium fell 0.2 percent to $760.70 an ounce, slipping 5.1 percent this week. The price surged 97 percent last year. Cash platinum fell 0.4 percent to $1,724.90 an ounce, bringing this week’s loss to 2.6 percent. Platinum gained 21 percent in 2010.

“If the payroll number is strong, investors should watch the support levels at $1,358 for gold, $28.40 for silver and $1,696 for platinum,” Merath wrote. “If those levels hold, it would be a positive sign.”