Gold prices fell on Friday after the release of U.S. employment data. The dollar and Treasury yields strengthened as traders tempered expectations for more Fed easing before March next year.
February COMEX gold futures lost 1.56%, or $31.90, to settle at $2,014.50 an ounce. March silver futures fell 3.25%, or 78.3 cents, to settle at $23.276 an ounce. For the week, gold has lost 3.6% and silver has lost nearly 10%.
The dollar index rose 0.2%, making gold less accessible to holders of other currencies. The yield on 10-year U.S. Treasury notes rose.
US employment growth accelerated in November and unemployment fell to 3.7%, meaning market participants’ expectations of a Fed rate cut early next year may have been premature.
“Gold fell sharply as US nonfarm payrolls data showed broad-based strong labour market activity,” said independent trader Tai Wong.
Traders had previously seen a 60% chance of the Fed starting to ease monetary policy as early as March, but after the US employment data they tempered their expectations. Now the probability of such a development is estimated at 50%, and traders do not expect the rate cut to begin until May.
Their assumptions will be confirmed or refuted after the Fed meeting on December 12-13.
“Gold prices are likely to show a short-term decline, but demand will remain strong, which will keep gold in a sideways or uptrend,” said David Meger of High Ridge Futures.
Indian physical gold dealers have been offering the metal at the biggest discount in seven months this week to attract buyers. Record high prices have hurt demand.