Gold inches lower as traders rethink early rate cut bets
GOLD prices edged lower on Monday (Feb 5), as the US dollar and Treasury yields jumped after a blowout US jobs report dashed hopes for early interest rate cuts from the Federal Reserve.
Spot gold fell 0.1 per cent to US$2,036.96 per ounce by 0215 GMT.
US gold futures were flat at US$2,053.50 per ounce.
The US dollar index rose to an eight-week high, making bullion more expensive for other currency holders, while yields on benchmark 10-year Treasury notes rose to more than 4 per cent.
Data from the US Labor Department showed on Friday that nonfarm payrolls increased by 353,000 jobs in January, almost double the 180,000 forecast by economists polled by Reuters.
Fed chair Jerome Powell last week dismissed the idea of lowering interest rates in the spring, but voiced confidence that inflation would return to the central bank’s 2 per cent target.
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Traders are betting on five quarter-point Fed rate cuts for 2024, down from six last Monday, according to LSEG’s interest rate probability app IRPR.
The odds for a cut in May have also lengthened. Lower interest rates boost non-yielding gold’s appeal by decreasing the opportunity cost of holding bullion.
Investors are awaiting remarks from a host of Fed speakers this week for further clues on rate cuts.
China’s services activity expanded at a slightly slower pace in January as new orders fell, a private sector survey showed, suggesting a soft start for the world’s No 2 economy amid tepid demand and a property slump.
Comex gold speculators cut their net long position by 4,639 contracts to 71,976 in the week ended Jan 30, data showed on Friday.
Spot silver fell 0.3 per cent to US$22.61 per ounce, platinum shed 0.3 per cent to US$893.69, and palladium dropped 0.8 per cent to US$939.26. REUTERS
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