- Gold fell as strong US jobs data raised bets on Fed rate hikes this year
- Bullion dropped up to 2.5% amid rising bond yields and a stronger dollar
- Traders price a quarter-point Fed hike by December, 60% chance by October
Gold fell as robust US jobs data fueled bets that the Federal Reserve will likely raise interest rates this year, a headwind for the precious metal.
Bullion declined as much as 2.5% as bond yields and the dollar climbed after the latest US data showed job growth topped all forecasts in May. The strength in the labor market keeps the door open for Fed officials to hike rates as Middle East tensions fuel higher energy prices. Higher rates are typically negative for non-yielding bullion.
ALSO READ | US Stock Market Today: AI Chip Rout Drags Nasdaq 2% To Day's Low; S&P 500, Dow In Red
“Gold faces a double headwind from rising real yields and a firmer dollar,” said Elias Haddad at Brown Brothers Harriman & Co. A break below the 200-day moving average, a widely watched measure of long-term momentum, points to the risk of deeper declines, according to Haddad.
Traders now fully priced in a quarter-point rate hike by the Fed by December, and saw a roughly 60% chance of one as soon as October. Before the data, they'd expected policymakers' next move to be a hike in March. Fed officials meet June 16-17 under the leadership of new Chairman Kevin Warsh.
Meanwhile, the US and Iran have made little progress in talks over an interim peace deal this week, with the sides seeing their worst clashes since an April ceasefire began and fighting continuing in Lebanon. The war, now in its fourth month, has disrupted energy flows via the Strait of Hormuz, driven oil prices higher and raised concerns about global inflation.
This makes central banks more likely to keep interest rates steady or raise them — a headwind for precious metals. Gold dropped sharply after the conflict began in late February and has traded in a narrow band in the last few weeks. On Friday, it was roughly 17% below pre-war levels.
Spot gold fell 2.4%% to $4,367.77 an ounce as of 10:11 a.m. in New York. Silver dropped 6.0% to $69.41 an ounce. Platinum and palladium also declined. The Bloomberg Dollar Spot Index rose 0.3%.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
