Gold dips on stronger dollar after US payrolls data

GOLD prices fell on Monday (Apr 10) as the dollar firmed after the US non-farm payrolls report pointed to a tight labour market and raised the odds of another rate hike by the Federal Reserve at its May policy meeting.

Spot gold was down 0.4 per cent at US$2,000.57 per ounce, as of 0041 GMT. US gold futures also slipped 0.4 per cent to US$2,017.80.

The dollar index was 0.1 per cent higher, making bullion expensive for overseas buyers.

Friday’s data from the US Labor Department showed non-farm payrolls increased by 236,000 jobs in March, versus expectations of 239,000. The data also showed the unemployment rate dipped to 3.5 per cent from 3.6 per cent in February.

The data raised bets that the US central bank would raise interest rates next month, with markets pricing in a 66.3 per cent chance of the Fed hiking rates by a quarter of a percentage point, according to the CME FedWatch tool.

While gold is traditionally considered a hedge against inflation, higher interest rates dim non-yielding bullion’s appeal.

European Central Bank governing council member Klaas Knot on Friday said it was unclear to him if a rates rise of 50 basis points (bps) was necessary in May, or if a scale back to 25 bps was a possibility.

Physical gold demand in key Asian hubs hit a pause last week with high domestic prices forcing dealers in some markets to lure customers with discounts.

Spot silver fell 0.5 per cent to US$24.89 per ounce, platinum lost 0.5 per cent to US$1,002.67 and palladium rose 0.2 per cent to US$1,469.55.

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Some European markets are closed on Monday for the Easter holidays. REUTERS