Gold edges down on rate hike views after strong U.S. jobs data
Spot gold on Friday declined 1.2 percent, its biggest one-day fall since Dec. 7. Last week, the metal saw its largest weekly decline since the week-ending Dec. 8.
Non-farm payrolls rose by 200,000 jobs in January, the U.S. Labor Department said, beating expectations of 180,000 and their largest annual gain in more than 8-1/2 years. Average hourly earnings rose and boosted the year-on-year increase to 2.9 percent, the largest rise since June 2009.
“We have a bearish outlook for gold … and yield-chasing behaviour and a rosy economic outlook should pressure the yellow metal lower,” said OCBC analyst Barnabas Gan.
“The higher interest rate environment will actually fuel further risk-taking and is not good for gold.”
Futures markets reacted on Friday after the jobs data by pricing in the risk of three, or even more, rate rises from the U.S. Federal Reserve this year.
The Fed last week held interest rates unchanged, but raised its inflation outlook and flagged “further gradual” rate increases.
Higher interest rates make gold less attractive to investors because it does not pay interest.
Asian share markets stumbled on Monday as fears of resurgent inflation-battered bonds, toppled Wall Street from record highs and sparked speculation central banks globally might be forced to tighten more aggressively.
“The fall in stocks has just started and it could just be a short-term correction before running higher. We should not read too much into the fall in stocks and relate it to gold,” Gan said.