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Gold slides over 2% as strong U.S. data bolsters Fed taper bets

06/03/2021 | 02:13pm EDT
FILE PHOTO: Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich

(Reuters) - Gold slid as much as 2.3% on Thursday as better-than-expected U.S. employment and service sector data propelled the dollar higher and boosted expectations that the strong economic readings may reignite taper talk from the Federal Reserve.

Bullion's retreat also spilled into other precious metals, with silver slipping as much as 4.3% and platinum shedding 3.7%.

Spot gold was down 1.9% at $1,871.91 per ounce by 1:43 p.m. EDT (1743 GMT), after falling to its lowest level since May 20 at $1,864.39. U.S. gold futures settled down 1.9% at $1,873.30.

"We're coming out of the woods here, the data is getting better, there are some inflation issues that could put a damper on things, but we have turned the corner," Bob Haberkorn, senior market strategist at RJO Futures, said.

"The better-than-expected data has put traders on the defense. They're preparing for possible statements from the Federal Reserve on tapering or higher rates, although not immediately."

The dollar index jumped 0.7%, making gold expensive for other currency holders, while the U.S. yields also ticked up.

Signaling a strong labor market recovery, new U.S. jobless claims dropped below 400,000 last week, while private employers stepped up hiring in May, the ADP National Employment Report showed.

Meanwhile, a measure of U.S. services industry activity increased to a record high in May.

"A much stronger-than-expected ADP result suggesting a similar bounce back in payrolls tomorrow after last month's terrible print has driven the dollar notably higher and triggered long liquidation in gold under $1,890," said Tai Wong, head of metals derivatives trading at BMO.

"The $1,850-60 support is significant and should hold in gold."

The focus now turns to key U.S. nonfarm payroll numbers due on Friday.

Silver fell 2.9% to $27.39 per ounce and platinum slipped 2.7% to $1,156.96 after sinking to its lowest level since late March, while palladium shed 1.2% to $2,821.55.

(Reporting by Sumita Layek in Bengaluru; Editing by Jonathan Oatis and Steve Orlofsky)

By Sumita Layek

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
GOLD -0.05% 1799.79 Delayed Quote.-5.09%
S&P GSCI PRECIOUS METALS INDEX -0.08% 2382.267 Delayed Quote.-4.68%
SILVER 0.37% 25.242 Delayed Quote.-4.46%
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