The Business Times

Gold prices tepid as US jobs data lifts Fed rate-hike bets

Published Mon, Oct 10, 2022 · 10:05 AM

GOLD prices ticked lower on Monday (Oct 10), having shed nearly 1 per cent in the previous session, as strong US jobs data cemented the view that the Federal Reserve would continue its policy of aggressive interest rate hikes.

Spot gold was down 0.1 per cent at US$1,693.19 per ounce, as of 1.00 am GMT, while US gold futures were down 0.4 per cent at US$1,703.4.

The dollar index was steady, having touched a one-week high on Friday, dimming gold’s appeal for overseas buyers.

US job growth slowed moderately in September while the unemployment rate dropped to 3.5 per cent, pointing to a tight labour market, which keeps the Fed on its aggressive monetary policy tightening campaign for a while.

Rising US interest rates increase the opportunity cost of holding the non-yielding gold, while boosting the dollar, in which the precious metal is priced.

New York Federal Reserve president John Williams said on Friday the US central bank has more work to do to lower inflation and rebalance economic activity in a more sustainable way, and he warned that the unemployment rate will most likely rise as part of that process.

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Focus will now be on US inflation data due on Thursday.

Data on Friday showed inflation’s tightening stranglehold on the German economy, with a surge in import prices and drop in industrial output and retail sales adding to signs that Europe’s biggest economy is heading for recession.

Physical gold prices flipped to a discount in India last week as elevated local rates amid a dive in the rupee dampened festive demand, with higher prices playing spoilsport across other Asian hubs as well.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.21 per cent to 944.31 tonnes on Friday.

Spot silver fell 1.7 per cent to US$19.76 per ounce, platinum was down 0.8 per cent at US$905.20 and palladium was steady at US$2,182.44. REUTERS

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