Gold is retreating on the back of strong US data, but holding near $2,000

  • US payrolls for the month of March increased by 236,000
  • About a 68% chance of a Fed rate hike in May
  • Focus on the US CPI data on Wednesday

(Reuters) – Gold fell on Monday after strong US jobs numbers revived bets of another rate hike and support for the dollar, but persistent economic risks kept safe-haven bullion near the $2,000 level.

Spot gold fell 0.3 percent to $2,000.86 an ounce by 1034 GMT, while US gold futures fell 0.5 percent to $2,015.50.

US Labor Department data on Friday showed that non-farm payrolls increased by 236,000 jobs last month.

Markets now see the US Federal Reserve raising interest rates next month,

Han Tan, senior market analyst at Exinity, said that the recent decline in gold may also be a technical pullback from near overbought conditions.

Tan added that signs that the US inflation rate is picking up, allowing the Federal Reserve to halt interest rate increases sooner rather than later, could bring gold back to its recent high levels.

Gold is traditionally considered a hedge against inflation, but higher interest rates increase the opportunity cost of holding a non-yielding asset.

Gold breached the $2000 level last week as some weak US data exacerbated downside risks in the wake of higher oil prices.

“The upward trend, which has been established since November 2022, remains intact,” MKS PAMP Metals said in a note.

However, a “steadier” US core CPI would boost a 25bp rise and ensure that, barring a new catalyst, gold prices may not hit all-time highs this month.

The US CPI reading is due at 1230 GMT (8:30 AM EST) on Wednesday.

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Higher flows into gold-redeeming ETFs, money managers driving net long positions to their highest levels in more than a year, and central banks adding to gold reserves in recent months all remain bullish catalysts for gold, Exinity’s Tan said.

Silver fell 0.2 percent to $24.97 an ounce, platinum rose 0.2 percent to $1,009.32, while palladium rose 0.3 percent to $1,470.11.

Australian, Hong Kong and European markets were closed on Monday for the Easter holiday.

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Additional reporting by Seher Dareen and Kavya Guduru in Bengaluru; Editing by Susan Fenton

Our standards: Thomson Reuters Trust Principles.

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