Gold slides as US jobs data dampen bets of early rate cut

GOLD PRICES fell on Monday, as the US dollar and Treasury yields surged after a robust jobs report crushed expectations of nearterm interest rate cuts from the US Federal Reserve.

Spot gold was down 0.5% at $2,029.03 per ounce by 0556 GMT. US gold futures fell 0.4% to $2,045.50 per ounce.

“Large speculators and managed funds trimmed long exposure to gold futures for a fourth week... and with Jerome Powell reiterating three rate cuts for the year, it remains debatable as to whether gold can rally from here,” said Matt Simpson, a senior analyst at City Index.

Traders are betting on fourquarter-point Fed rate cuts for 2024, down from six last Monday, according to LSEG’s interest rate probability app IRPR.

The odds for a cut in May have also lengthened. Lower interest rates boost non-yielding gold’s appeal by decreasing the opportunity cost of holding bullion.

The dollar index hit an eightweek high, making bullion more expensive for other currency holders, while yields on benchmark 10-year Treasury notes rose to more than 4%.

Data from the US Labor department showed on Friday that nonfarm payrolls increased by 353,000 jobs in January, almost double the 180,000 forecast by economists polled by Reuters.

Fed Chair Jerome Powell last week dismissed the idea of lowering interest rates in the spring but voiced confidence that inflation would return to the central bank’s 2% target.

Spot silver fell 0.5% to $22.56 per ounce; palladium dropped 0.8% to $939.26; while platinum rose 0.5% to $894.99.