Commodity Blog

Gold and silver dropped today on speculations that steady growth of the US economy will lead to an interest rate hike from the Federal Reserve in not-so-distant future. It is expected that US nonfarm payrolls, which are to be released tomorrow, will demonstrate robust growth by approximately 200,000. The employment report from Automatic Data Processing demonstrated growth near this figure, but the ADP report has been a poor prediction tool for the official data in the recent times.

Good nonfarm payrolls would confirm a healthy state of the US economy, giving more incentive for the Fed to trim stimulus. Such outlook spurs investors to pull off their funds from safe assets, like precious metals, and put them in higher-yielding ones, like stocks. Of course, economic growth means inflation and potential demand for gold as an inflation hedge, but for now growth prospects are detrimental to prices.

June futures for gold dropped $3.8 (0.29 percent) to $1,287.0 per troy ounce as of 21:07 GMT on COMEX today. May contract for delivery of silver lost as much as $0.24 (1.17 percent) to $19.82.

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