Gold hits over 4-week low as dollar edges higher

GOLD prices hit a more than four-week low on Monday (Feb 6), as the US dollar firmed after stronger-than-expected jobs data fanned concerns that the Federal Reserve might keep hiking interest rates.

Spot gold was little changed at US$1,865.88 per ounce, as of 0045 GMT, after hitting its lowest level since Jan 6 earlier in the session. US gold futures rose 0.2 per cent to US$1,879.40.

The dollar index was 0.2 per cent higher, making gold less attractive for buyers holding other currencies.

Data on Friday showed US job growth accelerated sharply last month, with nonfarm payrolls surging by 517,000 jobs — well above an estimate of 185,000. The unemployment rate hit more than a 53-1/2-year low of 3.4 per cent.

Interest-rate futures traders moved after Friday’s job report to price in a further interest-rate increase in May, which would bring the policy rate to the 5-5.25 per cent range, and are now expecting eventual Fed rate cuts to start in November versus in September previously.

High interest rates usually dim bullion’s appeal since they translate to an increased opportunity cost of holding the asset, which pays no interest.

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Data on Friday also showed US services industry activity rebounded strongly in January, with new orders recovering and prices paid by businesses for materials continuing to rise at a moderate pace.

Physical gold demand in India ticked up last week, as jewellers resumed purchases after staying away for a couple of weeks hoping for an import duty cut in the government budget amid the wedding season.

Spot silver lost 0.5 per cent to US$22.24 per ounce, platinum eased 0.1 per cent to US$973.04 and palladium slipped 0.5 per cent to US$1,616.54. REUTERS