Gold slips as dollar gains after US jobs report

Gold prices slipped late last week, pressured by a stronger dollar and as better-than-expected US jobs data raised concerns that the Federal Reserve would maintain an aggressive pace of interest-rate increases.

The afternoon fixing on Friday in London was $1,844.90 an ounce, compared with $1,851.80 a week earlier. Thai selling prices were quoted at 30,150 baht per baht-weight (15.2 grammes), up 150 baht from the previous week.

Data showed US employers hired more workers than expected in May and maintained a fairly strong pace of wage increases, signs of labour market strength.

“If the Federal Reserve sees the economy continuing to remain stable in the midst of its rate-raising efforts, they might feel more emboldened to raise rates at a faster pace,” said David Meger, director of metals trading at High Ridge Futures.

Higher US interest rates increase the opportunity cost of holding gold, which bears no interest, while boosting the dollar in which it is priced.

Cleveland Federal Reserve Bank president Loretta Mester said last Friday she was looking for “compelling” evidence that inflation has peaked, and if it hasn’t, the Fed could keep lifting rates by 50 basis points per meeting until September.

A 50-bps increase is widely expected at the next Fed meeting, scheduled for June 14 and 15.

In the physical market, Indian demand faltered as prices rose and the wedding season started winding down, while consumers remained wary of purchasing bullion in China amid a gradual relaxing of coronavirus restrictions.

Indian dealers offered a discount of up to $9 an ounce over official domestic prices, up from $5 the week before, while local gold prices traded near a one-month high.

“Wedding season is coming to an end. In June demand will remain muted,” said a Mumbai gold wholesaler.

In China, retailers remained cautious about replenishing gold stocks due to fears about potential new virus outbreaks, Metals Focus analysts wrote.