PRECIOUS-Gold slips 2% as recovery hopes bolster risk appetite
* Gold hits lowest level since May 7
* Private payrolls drop by 2.76 mln in May vs 9 mln forecast
Gold fell more than 2% on Wednesday as risk sentiment improved on hopes of a faster recovery from a coronavirus-driven economic slump, with investors largely overlooking civil unrest in the United States.
Spot gold fell 1.6 % to $1,699.37 per ounce by 1:05 p.m. EDT (1705 GMT), having earlier hit a near one-month low of $1,688.89.
U.S. gold futures fell 1.75 % to $1,703.50 per ounce.
“There is a strong risk-on sentiment right now… U.S. equity markets are breaking out,” said Phil Streible, chief market strategist at Blue Line Futures in Chicago.
A gauge of global equity markets rose and the euro gained against the dollar on Wednesday as easing lockdowns and hopes for more monetary stimulus boosted investor confidence.
Sentiments were also bolstered by data showing U.S. private payrolls fell less than expected in May, suggesting layoffs were abating as businesses reopen.
Also, data from Institute for Supply Management showed U.S. services industry activity pushed off an 11-year low in May.
“It (latest economic data) shows that maybe things are coming back faster than expected,” said Bob Haberkorn, senior market strategist at RJO Futures.
The supporting fundamentals for gold like lower interest rates and quantitative easing programs have not changed, Haberkorn said, adding, in longer term gold should go higher.
Lower interest rates reduce the opportunity cost of holding non-yielding gold, which also tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement.
U.S. protesters ignored curfews overnight as they vented their anger over the death of an unarmed black man at the hands of police.
Holdings of SPDR Gold Trust gold-backed exchange-traded fund rose to 1,129.28 tonnes on Tuesday, their highest since April 2013.
Elsewhere, palladium fell 0.3% to $1,943.14 an ounce, while platinum dipped 0.5%, to $834.78 per ounce.
Silver fell 2.3% to $17.68 per ounce.
By Eileen Soreng
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