Gold falls to one-week low after good US jobs data

Bengaluru — Gold prices fell to a one-week low on Monday, as solid US jobs data added to worries that the US Federal Reserve would charge ahead with aggressive interest rate hikes to tame inflation.

Spot gold was down 0.4% at $1,687.79/oz, as of 3.48am GMT, after hitting its lowest since October 3 at $1,686.45. US gold futures were down 0.8% at $1,695.60/oz.

The dollar index was steady after touching a one-week high on Friday. A stronger greenback makes gold costlier for buyers holding other currencies.

“Gold prices are taking their cue from the build-up in rate-hike expectations from last week, brought on by the hotter-than-expected US job report,” said IG market strategist Yeap Jun Rong.

Data showed on Friday US job growth slowed moderately in September while the unemployment rate dropped, signalling a resilient economy and dousing hopes of a Fed pivot any time soon.

Investors will now focus on the US inflation data due later this week. Headline consumer price inflation is seen slowing a touch to an annual 8.1%, but the core measure is forecast to accelerate to 6.5% from 6.3%.

“The core CPI is expected to show some persistence and should keep the Fed’s rate-hike process well-anchored,” said Yeap adding that gold prices seemed to remain locked in a downward trend for now.

While gold is often seen as a hedge against inflation, rising US interest rates increase the opportunity cost of holding the non-yielding gold.

Gold prices have fallen more than $350 since surging past the $2,000-mark in March, amid aggressive US monetary policy tightening.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 2.03 tonnes on Friday, marking its biggest outflow since late September.

Spot silver was down 2% at $19.71/oz after hitting a one-week low. Platinum fell 0.7% to $905.51, while palladium inched 0.1% higher to $2,183.99.

Reuters