Gold slides after US jobs data keeps pressure on the Fed to hike

GOLD declined below US$1,700 an ounce after US jobs data showed the labour market remains tight, dashing hopes the Federal Reserve will become less aggressive with rate hikes.

Nonfarm payrolls rose 263,000 last month, slightly higher than economists’ estimates, while the unemployment rate declined. The dollar and Treasury yields climbed following the data release, putting pressure on gold, which fell as much as 1.3 per cent.

The data will keep the Fed on a hawkish track as it tries to cool the US labour market, which has helped drive inflation to the highest in decades. The central bank’s relentless rate hikes have weighed on gold throughout the year, causing it to slide about 18 per cent from a March-high.

Weaker data earlier in the week on US manufacturing and job openings fuelled expectations that the Fed may slow its aggressive rate hikes, sparking gold’s climb above US$1,700. Fed officials have still been insistent inflation remains too high, and they won’t be deterred from tightening policy by volatility in the markets.

Spot gold lost 0.9 per cent to US$1,696.70 an ounce as of 1:58 pm in London, after slipping 0.2 per cent in the previous session. The Bloomberg Dollar Spot Index strengthened 0.3 per cent. Silver and palladium declined, while platinum gained. BLOOMBERG