Gold Slides 1% After US Jobs Data Raises Rate Hike Bets

GOLD - SINGAPORE. Gold prices fell about 1% to slip below $2,000 on Monday, after U.S. employment data pointed to a tight labour market and raised expectations of another rate hike by the Federal Reserve in May.

Spot gold was down 0.9% at $1,990.69 per ounce, as of 0402 GMT. U.S. gold futures slipped 1% to $2,006.30.

Gold slid due to "profit-booking on expectations of Fed rate hikes followed by Friday's strong U.S. job growth report and a steady dollar," Hareesh V, head of commodity research at Geojit Financial Services, said while noting a technical correction in prices.

The dollar index .DXY was 0.1% higher, making bullion expensive for overseas buyers.

Friday's data from the U.S. Labor Department showed non-farm payrolls increased by 236,000 jobs in March, versus expectations of 239,000. The data also showed the unemployment rate dipped to 3.5% from 3.6% in the prior month.

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The report raised bets that the U.S. central bank would increase rates next month, with markets pricing in a 66% chance of a 25 basis-point (bps) rate hike, according to the CME FedWatch tool.

But "the short-term outlook remains bullish for gold. As long as prices stay above $1,920 there are chances for the bullish outlook to continue," Geojit's Hareesh added.

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

"The bull trend, established since November 2022, is still intact," metals firm MKS PAMP said in a note but added a "stickier" core U.S. CPI on Wednesday would solidify a 25 bps hike and ensure, unless there's a new catalyst, gold prices might not hit all-time highs this month.

Spot silver shed 1% to $24.75 per ounce, platinum lost 0.5% to $1,002.35 and palladium fell 0.3% to $1,461.31.

Australia, Hong Kong and some European markets are closed on Monday for the Easter holidays.