Gold bullion slips as dollar, yields gain

GOLD dropped to more than a oneweek low on Monday, weighed down by a higher dollar and bond yields after a solid US jobs report and remarks from Federal Reserve officials dashed expectations of early interest rate cuts.

Spot gold was down 0.6% at $2,027.09 per ounce by 2:09 p.m. EST (1909 GMT) after hitting its lowest level since Jan. 25 earlier in the session.

US gold futures settled 0.5% lower at $2042.90.

“We’re seeing the hangover effect of the Friday strong jobs report which pushed Treasury yields and the US dollar index higher, and that’s continuing today, and weighing on gold,” said Jim Wyckoff, senior analyst at Kitco Metals.

However, gold should hold above the $2,000 level due to geopolitical uncertainties in the market that could quickly prompt some safe-haven demand, he added.

The dollar index rose 0.5% to trade near a three-month high, making bullion more expensive for other currency holders, while yields on benchmark 10-year Treasury notes climbed over a one-week high.

The blowout job growth and large wage gains dashed prospects of a Fed rate cut next month. Traders also lowered their bets for a cut in borrowing costs at the end of the US central bank’s April 30-May 1 meeting.

Minneapolis Fed President Neel Kashkari said on Monday that a resilient US economy and a possibly higher neutral rate of interest means the central bank can take time before deciding to reduce interest rates.

The Fed can be “prudent” in deciding when to cut its policy rate, with a strong economy allowing central bankers time to build confidence that inflation will fall further, Fed Chair Jerome Powell said in an interview.

Spot silver fell 1.3% to $22.38 per ounce; while palladium was steady at $946.96; and platinum gained 0.8% to $897.65. —