Gold slips as strong US jobs data lifts dollar and Treasury yields

what happened

Gold prices fell on Friday after the October US jobs report beat forecasts, with nonfarm payrolls rising more than expected and unemployment dropping to 4.1%. Reuters noted that the data pointed to a resilient labor market and gave the Fed room to focus on inflation linked to the Middle East conflict. Spot gold touched an intraday low of $4,033.29, then traded between $4,062 and $4,074 an ounce at different points in the session. The dollar gained 0.7% to its highest level since October 29, while 10-year Treasury yields climbed.

why it matters

Higher rates raise the cost of holding bullion, which pays no interest, so the move reflects a shift in rate expectations. CME's FedWatch tool shows an 81% chance of a December hike, up from 72.8% before the report. Gold had hit a one-year low of $3,869.85 on October 30, and for the week it was still up roughly 5%, with silver, platinum and palladium also heading for weekly gains.

market impact

Gold: strong jobs data, a firmer dollar and higher yields press the metal lower

• ▼Gold pressure down — firmer rate expectations make non-yielding bullion less attractive
• ▲US dollar pressure up — the strong payrolls report reinforces bets on a tighter Fed stance
• ▲US 10-year Treasury yield pressure up — markets price in higher Fed rates, pushing yields up

tags

instruments