Metals Caught Between Global Gloom, U.S. Job Gains as Gold Slips

(Bloomberg) -- Metal markets are caught between global gloom and renewed U.S. optimism.

A six-week surge by gold, the quintessential haven investment, stalled on Friday as better-than-expected U.S. jobs data blunted global economic concern that has boosted safe-haven demand. Copper, often used as a barometer for the global economy, gained as much as 0.9 percent after the labor report.

Gold has climbed 28 percent this year, with demand for havens surging after the U.K.'s Brexit vote and traders cutting bets on the Federal Reserve increasing interest rates this year. The Fed wants more proof that hiring has resumed a healthy pace and that economic momentum is intact before raising interest rates, minutes released Wednesday of last month's meeting showed.

Members of the Fed “are breathing a sigh of relief after this report, but the U.S. economy and more importantly the global economy is still in a state of uncertainty,” Chris Gaffney, president of EverBank World Markets in St. Louis, said in an e-mail. Those concerns “will keep them from moving rates higher in 2016,” he said.

Bullion futures for August delivery slipped 0.4 percent to $1,356.50 an ounce at 11:03 a.m. on the Comex in New York, after falling as much as 1.9 percent following the payrolls report. The metal has climbed 1.2 percent this week, set for the longest streak of weekly advances since July 2014.

Copper futures for delivery in September rose 0.1 percent to $2.1245 a pound on the Comex. Prices are down 4.2 percent for the week, the biggest loss since May 6.

IMF Cut

Payrolls in the U.S., the second-largest copper user, climbed the most in eight months in June, exceeding the highest estimate in a Bloomberg survey, a government report showed Friday. The International Monetary Fund cut its 2017 growth forecast for the euro area, citing the U.K.'s June 23 referendum.

“Gold sold off just based off the headline number” from the jobs report, Bob Haberkorn, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “One jobs number isn't going to change the outlook for the Fed right now. It hasn't changed the fundamental outlook for the global economy, because we still have Brexit and low rates.”

After the U.K.'s June 23 referendum led a vote to withdraw from the EU, policy makers around the world are watching for signs that weakness stemming from the heightened uncertainty is damping growth. Central banks have pledged to support global liquidity levels, and Fed officials say they are closely monitoring the situation.

“If we're going to see a slowdown in economic growth, that's going to have a very negative impact on copper demand,” Peter Thomas, a senior vice president at Zaner Group LLC, a metals broker in Chicago, said in a telephone interview. “The whole Brexit thing is casting a doubt” on global growth prospects, he said.

--With assistance from Ranjeetha Pakiam and Eddie van der Walt To contact the reporter on this story: Luzi Ann Javier in New York at ljavier@bloomberg.net. To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Joe Richter, Steven Frank