Gold muted as dollar, yields firm on strong US jobs data

[BENGALURU] Gold prices was flat on Monday (Apr 4), as the US dollar and yields firmed after strong jobs data raised expectation of aggressive rate hikes, offsetting support from safe-haven demand fuelled by a worsening Ukraine crisis.

Spot gold was little changed at US$1,922.43 per ounce by 2.02 am GMT. US Gold futures were up 0.2 per cent at US$1,927.50.

The dollar made a firm start to the week as US Treasury yields rose with expectations of rapid-fire interest rate hikes.

A stronger dollar makes gold less attractive for other currency holders, while higher yields increase the opportunity cost of holding non-paying bullion.

Data on Friday showed US unemployment hitting a 2-year low of just 3.6 per cent last month, strong enough that investors bet it would strengthen the Federal Reserve's resolve to tackle inflation by lifting rates sharply.

Fed funds futures have priced a near 4/5 chance of a 50 basis point hike next month and 2-year yields stand at a 3-year high of 2.4930 per cent.

Germany's defence minister said on Sunday that the European Union must discuss banning imports of Russian gas, which could drag further on growth and the currency after Ukrainian and European officials accused Russian forces of atrocities.

Physical gold demand in India improved last week as domestic prices dropped ahead of a festival over the weekend, while purchases in top consumer China were limited by Covid-19 lockdowns.

Spot silver edged 0.1 per cent higher to US$24.63 per ounce, platinum was down 0.1 per cent at US$984.67 and palladium rose 2.2 per cent to US$2,326.18. REUTERS