Gold drops as dollar, yields rise on stronger US jobs data

The dollar index was 0.9% higher, making bullion more expensive for overseas buyers. Benchmark 10-year bond yields also gained.

US employers added 3,53,000 jobs in January, beating the 1,80,000 economists had expected. A resilient economy and strong worker productivity encouraged businesses to hire and retain more employees, a trend that could shield the economy from a recession this year.

With a decline of less than 1% since the data, gold is ”holding on like a barnacle despite a whopper of an employment report,” said Tai Wong, a New York-based independent metals analyst.

”But we might need to wait a little and see if gold grinds much lower,” added Wong.

According to the CME Fed Watch Tool, traders now expect about a 70% chance of a US rate cut in May, compared to 92% before the data. Lower interest rates boost non-yielding bullion’s appeal.

Fed Chair Jerome Powell this week dismissed the idea of lowering interest rates in the spring but voiced confidence that inflation would return to the 2% target.

”If these (interest) rates stay where they are and there is a lack of clarity around that, what we’ll likely see is a rather muted environment for the upside for gold,” said WGC market strategist Joseph Cavatoni.

Among other precious metals, spot silver lost 2% to $22.7 per ounce, platinum fell 2.1% to $894.50 and palladium was down 1.4% at $949.05.