Gold slipped below the key $2,000 level on Monday as the dollar advanced on Friday’s strong U.S. jobs numbers, while traders also positioned for inflation readings this week that could offer further cues on interest rate hikes.
Spot gold fell 0.9% to $1,990.29 per ounce by 10:22 a.m. ET, while U.S. gold futures slipped about 1% to $2,005.30.
U.S. employers maintained a strong pace of hiring in March, likely giving room for the Federal Reserve to hike rates again.
Chances of a 25-basis point rate hike next month were now pegged at 69%, driving an uptick in the dollar, making dollar-denominated bullion less attractive for holders of other currencies.
Higher interest rates usually dull the appeal of zero-yielding gold, despite its traditional status as an inflation hedge.
Gold slides 1% after US jobs data raises rate hike bets
“With the probability of energy inflation, rate hikes are still on the table and that can push gold back even further,” said Daniel Pavilonis, senior market strategist at RJO Futures.
Gold surpassed $2,000 last week as weak U.S. economic data spurred worries of a slowdown following a surge in oil.
“If interest rates are a quarter basis point here, quarter basis point there, I don’t think the stocks would react too negatively to that, but what that would do to gold is really box the market in,” Pavilonis added.
The U.S. CPI print is due at 1230 GMT on Wednesday, and will be followed by Fed minutes from their last meeting, later in the day.
Signs that U.S. disinflation is gathering pace, allowing the Fed to pause rate hikes sooner rather than later, may restore gold to recent highs, said Han Tan, chief market analyst at Exinity.
Silver fell 0.6% to $24.85 per ounce, platinum shed 1.5% to $992.73, while palladium dropped 2% to $1,436.98.
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