Gold declined following a solid U.S. labor report that may strengthen the Federal Reserve’s case to use aggressive interest-rate hikes to tackle inflation.
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The U.S. added close to half a million jobs in March and the unemployment rate fell by more than expected, a Labor Department report showed Friday. Treasury yields surged in response and the dollar gained, dampening bullion’s appeal since it generates no interest and is priced in the greenback.
Gold just notched its best quarter since 2020, driven by concerns the war in Ukraine and high commodity prices could dent global growth. But the rally has recently lost some steam thanks to an increasingly hawkish tone from Fed officials. Several Wall Street banks have increased their bets on rapid tightening of monetary policy. Talks between Ukraine and Russia resumed Friday via video link.
“Another strong jobs report sees gold remain in the crosshairs as Fed pricing provides a constant dark cloud over the precious metal market,” TD Securities commodity strategists led by Bart Melek said in a note.
Central banks are tackling price pressures fueled by a conflict that has disrupted commodity flows. Traders are increasingly on edge about prospects for the loss of Russia’s energy exports, which would further fan inflation.
Spot gold fell 0.7% to $1,924.39 an ounce at 4:29 p.m. in New York. Bullion for June delivery slipped 1.6% to settle at $1,923.70 on the Comex. The Bloomberg Dollar Spot Index added 0.2%. Silver declined.
In the first quarter, gold rose 5.9%, the biggest such jump since the three months ended June 30, 2020.