Gold falls as strong US jobs data dims rate-cut prospects

Traders now see nearly a 39% chance for a Fed rate cut next month, down from 60% earlier this month

Gold prices slipped on Friday (Nov 21) and were on track for a weekly fall, as a stronger-than-expected US jobs report reinforced expectations that the US Federal Reserve will refrain from cutting rates at its December meeting.

Spot gold was down 0.2 per cent at US$4,062.79 per ounce, as at 9.57 am. Bullion has lost 0.3 per cent so far this week. US gold futures for December delivery edged 0.2 per cent higher to US$4,068.10 per ounce.

The closely watched US Labor Department report, delayed by the federal government shutdown, showed that September nonfarm payrolls increased by 119,000, more than double the estimated increase of 50,000.

Traders now see nearly a 39 per cent chance for a Fed rate cut next month, down from 60 per cent earlier this month.

Gold, a non-yielding asset, tends to do well in low-interest-rate environments.

The US dollar was on track on Friday for its strongest weekly performance in more than a month, as investors wagered the Fed is unlikely to cut rates next month. A stronger US dollar makes greenback-priced gold more expensive for holders of other currencies.

Minutes from the Fed’s October meeting released on Wednesday showed it cut interest rates even as policymakers cautioned that doing so could risk entrenched inflation and a loss of public trust in the US central bank.

Chicago Fed president Austan Goolsbee repeated on Thursday he is “uneasy” about frontloading interest-rate cuts, particularly with progress on inflation towards the Fed’s 2 per cent goal looking to have stalled and starting to go the wrong way.

Cleveland Fed president Beth Hammack warned on Thursday that cutting rates further right now carries a wide range of risks for the economy. Fed governor Lisa Cook sees a risk of outsized asset price declines.

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SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.41 per cent to 1,039.43 tonnes in the previous session from 1,043.72 tonnes on Wednesday.

Elsewhere, spot silver slipped 0.4 per cent to US$50.39 per ounce, platinum climbed 0.4 per cent to US$1,517.95, and palladium added 0.3 per cent to US$1,381.22. REUTERS

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