By Anushree Ashish Mukherjee
(Reuters) – Gold dropped to more than a one-week low on Monday, weighed down by a higher dollar and bond yields after a solid U.S. jobs report and remarks from Federal Reserve officials dashed expectations of early interest rate cuts.
Spot gold was down 0.6% at $2,027.09 per ounce by 2:09 p.m. EST (1909 GMT) after hitting its lowest level since Jan. 25 earlier in the session.
U.S. gold futures settled 0.5% lower at $2042.9.
“We’re seeing the hangover effect of the Friday strong jobs report which pushed Treasury yields and the U.S. dollar index higher, and that’s continuing today, and weighing on gold,” said Jim Wyckoff, senior analyst at Kitco Metals.
However, gold should hold above the $2,000 level due to geopolitical uncertainties in the market that could quickly prompt some safe-haven demand, he added.
The dollar index rose 0.5% to trade near a three-month high, making bullion more expensive for other currency holders, while yields on benchmark 10-year Treasury notes climbed over a one-week high. [US/][USD/]
Data on Friday showed that U.S. nonfarm payrolls increased by 353,000 jobs in January, the largest gain in a year.
The blowout job growth and large wage gains dashed prospects of a Fed rate cut next month. Traders also lowered their bets for a cut in borrowing costs at the end of the U.S. central bank’s April 30-May 1 meeting.
Minneapolis Fed President Neel Kashkari said on Monday that a resilient U.S. economy and a possibly higher neutral rate of interest means the central bank can take time before deciding to reduce interest rates.
The Fed can be “prudent” in deciding when to cut its policy rate, with a strong economy allowing central bankers time to build confidence that inflation will fall further, Fed Chair Jerome Powell said in an interview.
Investors’ focus now shifts to remarks from a host of Fed speakers this week for further clues on the timing of rate cuts.
Spot silver fell 1.3% to $22.38 per ounce, while palladium was steady at $946.96 and platinum gained 0.8% to $897.65.
(Reporting by Anushree Mukherjee in Bengaluru; Editing by Shilpi Majumdar and Paul Simao)
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