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Gold falls as economic outlook curbs demand

Gold fell in New York, as investors assessed the health of the U.S. economy after last week’s jobs report.

U.S. data showed Aug. 1 that while employers added more than 200,000 jobs for a sixth month, the jobless rate rose.

Gold prices climbed after the report, as the dollar weakened from a four-month high against 10 major currencies and equities slipped amid concern that Argentina’s default and a crisis at Portugal’s Espirito Santo SA would constrict credit markets.

The Federal Reserve said last week that slack in the labor market persisted even as the economy was picking up, repeating that it will keep interest rates low for a considerable time after ending asset purchases.

Bullion, which slid 28 percent last year on the outlook for reduced U.S. stimulus, reached a three-month high on July 10, partly as tension over Ukraine and in the Middle East spurred demand for a haven.

“The U.S. Federal Reserve is still exercising restraint as regards any normalization of the interest rate level in the near future,” analysts at Commerzbank AG (OTC: CRZBY)wrote Monday in a report. “Nonetheless, good economic data over the next few months are likely to put the subject of interest rate hikes back on the Fed’s agenda, which should reduce the relative attractiveness of gold.”

Gold for December delivery lost 0.2 percent to $1,292.80 an ounce by 7:30 a.m. on the Comex in New York.

It reached $1,281 on Aug. 1, the lowest since June 19. Bullion for immediate delivery fell 0.2 percent to $1,291.67 in London, according to Bloomberg generic pricing.

Trading volume

Futures trading volume was 56 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.

Bullion futures’ 14-day relative-strength index fell to 39.3 last week, the lowest since June 9. A drop to 30 is seen as a sign by some traders who study charts that prices are poised to rise. It was at 44.9 Monday.

“The U.S. employment situation is perhaps not as rosy as hoped for and that the Fed may well be right with their statement the other day stating that they still had concerns about the job market,” David Govett, head of precious metals at Marex Spectron Group in London, said in a note Monday.

Silver for September delivery was 0.2 percent higher at $20.41 an ounce in New York, after falling to $20.245 on Aug. 1, the lowest since June 19.

Platinum for October delivery added 0.2 percent to $1,466.70 an ounce. It reached a five-week low of $1,456.30 on Aug. 1. Palladium for September delivery was little changed at $864.65 an ounce.

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