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Gold price drops to 3-week low on solid US jobs data

Gold extended its decline on Friday after solid US non-farm payrolls data raised fears that the Federal Reserve could keep hiking interest rates to combat inflation.

Spot gold fell 2.3% to $1,869.49 per ounce by noon ET, its lowest in three weeks. US gold futures saw a larger drop at 2.6% to $1,880.30 per ounce.

[Click here for an interactive chart of gold prices]

New data showed that US non-farm payroll employment rose by 517,000 in January, with the unemployment rate little changed at 3.4%. According to a Reuters survey of economists, an estimated 185,000 added jobs were expected.

“This (data) is going to add support the argument that the Fed might have to remain a little bit more aggressive going forward,” said Edward Moya, senior market analyst at OANDA, adding that it was only bad news for gold in the short-term.

Following the data, the US dollar jumped 0.9% to a two-week peak against a basket of currencies, making gold a less attractive bet.

Earlier this week, the US central bank delivered a quarter-percentage-point rate increase after a year of larger hikes, while Fed Chair Jerome Powell warned of further monetary policy tightening.

“Today’s strong jobs report appears to throw cold water on notions the Federal Reserve will back off on raising interest rates sooner rather than later,” said Jim Wyckoff, senior analyst at Kitco Metals.

(With files from Reuters)

Source: MINING.COM – Read More