By Seher Dareen
(Reuters) – Gold prices slipped more than 1% on Thursday, retreating from a near seven-month peak hit in the last session, as reports of a tighter-than-expected U.S. labour market boosted expectations of higher interest rates for longer.
Spot gold dropped 1.5% to $1,827.14 per ounce by 11:02 a.m. ET (1602 GMT). U.S. gold futures fell 1.4% to $1,833.40.
The strength in the dollar index and yields rising were weighing on gold, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago, highlighting that the Fed would continue to remain hawkish for longer as the labour market continues to be strong.
The dollar was up 0.9%, making gold more expensive for holders of foreign currencies, while benchmark 10-year yields were close to their session-highs. [USD/] [US/]
Higher interest rates tend to weigh on non-yielding bullion since it pays no interest.
The number of Americans filing new claims for unemployment benefits dropped to a three-month low last week while layoffs fell 43% in December, pointing to a tight labour market.
Atlanta Fed President Raphael Bostic on Thursday said U.S. officials of the central bank “remain determined” to lower inflation back to its 2% target, while Kansas City Fed leader Esther George said the bank would need to press forward with rate rises.
The U.S. economic outlook presented by Fed staff at last month’s meeting suggested that the battle to lower prices may last longer than anticipated.
Traders now await the U.S. Labor Department’s nonfarm payrolls (NFP) data on Friday.
“If we get the same kind of ‘beats-expectations’ (report), we’ll probably see another extension lower on gold and silver – $1,805-$1,800 is your key level support,” Streible added.
Spot silver sank 2.4% to $23.17 per ounce, platinum dropped 1.7% to $1,060.75 per ounce while palladium dipped 2.4% to $1,745.25.
(Reporting by Seher Dareen in Bengaluru; Editing by Devika Syamnath)
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