Gold Climbs from Five-Month Low After Biggest Drop Since October

Gold advanced from a five-month low, after the biggest one-day drop since October, as investors assessed whether the U.S. economy is strong enough to warrant a reduction in monetary stimulus.

Bullion for immediate delivery gained as much as 0.4 percent to $1,224.39 an ounce, and traded at $1,223.60 at 3:02 p.m. in Singapore. Prices earlier dropped to $1,217.84, the lowest since July 8, after tumbling 2.7 percent yesterday, the most since Oct. 1. The 14-day relative-strength index fell to 30 yesterday, signaling to some analysts who study charts that the price may be set to rebound.

Gold lost 27 percent this year, touching a 34-month low of $1,180.50 in June, on speculation theFederal Reserve will start paring asset purchases that drove a 12th annual advance in 2012. Data yesterday showed that while U.S. manufacturing unexpectedly accelerated in November at the fastest pace in more than two years, retail spending fell on the weekend after Thanksgiving for the first time since 2009.

“The path of least resistance appears to be lower for gold,” Howard Wen, an analyst at HSBC Securities (USA) Inc., wrote in a note. “The gold market may focus on the upcoming release of U.S. payrolls data. A better-than-expected employment report may increase expectations of a Fed tapering announcement from that meeting and thus weigh on gold prices.”

Gold for February delivery traded at $1,222.90 an ounce on the Comex in New York from $1,221.90 yesterday, when prices slumped 2.3 percent. Trading volume was 23 percent below the average for the past 100 days at this time of day, data compiled by Bloomberg showed.

Payroll Gain

Data this week may show that the U.S. is on track for the biggest annual gain in payrolls since 2005 before the Fed’s next gathering Dec. 17-18. Minutes of the last meeting released on Nov. 20 signaled that policy makers expected an improving economy to warrant trimming debt purchases in coming months.

Spot silver rose as much as 0.8 percent to $19.3215 an ounce, before trading at $19.3006. The worst-performing precious metal this year plunged 4.2 percent yesterday, the most since Sept. 20, and is down 36 percent in 2013.

One ounce of gold bought as much as 63.9395 ounces of silver today, the most since Aug. 12, as investors lost faith in a metal that’s a store of value and tied to economic growth.

Platinum climbed 0.2 percent to $1,346.50 an ounce, after declining to $1,340.15, the lowest since July 8. Palladium added 0.2 percent to $712.55 an ounce, snapping two days of losses.

Source: Bloomberg