Gold drops as dollar, yields rise on stronger US jobs data

Gold prices slipped on Friday as the dollar and yields jumped following a strong U.S. nonfarm payrolls report, which created some uncertainty about whether the Federal Reserve might start cutting interest rates soon, reports Reuters.
Spot gold was down 0.9% to $2,035.59 per ounce at 08:46 a.m. ET (1346 GMT), but prices were up 0.6% for the week and have held above the key $2,000 area since the start of the year. U.S. gold futures fell 0.9% to $2,052.40.
The dollar index (.DXY), opens new tab was 0.5% higher, making bullion more expensive for overseas buyers. Benchmark 10-year bond yields US10YT=RR also gained. USD./
U.S. employers added 353,000 jobs in January, beating the 180,000 jobs economists had expected. A resilient economy and strong worker productivity encouraged businesses to hire and retain more employees, a trend that could shield the economy from a recession this year.
With a decline of less than 1% since the data, gold is "holding on like a barnacle despite a whopper of an employment report," said Tai Wong, a New York-based independent metals analyst.
"But we might need to wait a little and see if gold grinds much lower," added Wong.
According to the CME Fed Watch, opens new tab Tool, traders now expect about a 78% chance of a U.S. rate cut in May, compared to 92% before the data. Lower interest rates boost non-yielding bullion's appeal.
Fed Chair Jerome Powell this week dismissed the idea of lowering interest rates in the spring, but voiced confidence that inflation would return to the 2% target.