(Bloomberg) -- Gold slipped, erasing gains that were driven by a soft US jobs report as traders booked profits while assessing the Federal Reserve's interest-rate path.
US employers scaled back hiring in April and the unemployment rate unexpectedly rose, suggesting some cooling is under way in the labor market after a strong start to the year. Nonfarm payrolls advanced 175,000 last month, the smallest gain in six months, a Bureau of Labor Statistics report showed Friday. The unemployment rate ticked up to 3.9% and wage gains slowed.
The readings revived the case that the Fed will be able to start cutting rates this year. Treasury yields and the dollar slipped after the print, helping send bullion higher by as much as 0.7% before giving up those gains. Swap traders pulled forward bets on the first Fed rate cut to September from December.
“The report highlighted the current dilemma the Fed faces with weaker economic data but stubborn high inflation,” said Ole Hansen, head of commodity strategy at Saxo Bank AS. “The sudden reversal lower is sending a signal the current consolidation/correction has further to go” after the metal's record-breaking rally this year.
The precious metal is on track for its first back-to-back weekly losses since February as data earlier this week suggested that the US central bank could wait longer to cut rates, which would be a headwind for gold as it doesn't pay interest. Fed Chair Jerome Powell said Wednesday policymakers need more evidence that price gains are cooling before reducing borrowing costs.
Still, bullion remains up 12% this year, after a record-breaking rally that saw bullion hit a succession of all-time highs in April. Those gains have been linked to strong central-bank purchases, demand from Asian markets — especially China — and haven buying amid conflicts in Ukraine and the Middle East.
Spot gold was down 0.8% at $2,286.65 an ounce as of 9:43 a.m. in New York. The Bloomberg Dollar Spot Index slipped 0.5%. Silver fell, while palladium and platinum rose.
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