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The decline follows the latest US labour report showing an accelerated job growth in November and a 3.7% decline in unemployment rate, which suggests that market expectations of a rate cut early next year were probably premature.
Meanwhile, the US dollar index firmed 0.2%, making bullion more expensive for overseas buyers. Moreover, 10-year Treasury yields ticked higher.
“Gold has slumped as the US employment report showed strength across the board,” said Tai Wong, a New York-based independent metals trader, in a Reuters note.
“If today, gold finishes at new lows under $2,009, that would be a signal that the correction has further to run. If gold holds well on a pretty strong payrolls number it will give buyers confidence that we’ve seen at least a short-term bottom.”
Traders had earlier priced in about a 60% chance of a March start to Fed rate cuts, but after the jobs data, pared that to just under 50%, with May now a more likely starting point.
Traders will seek further confirmation from the Fed meeting scheduled on Dec. 12-13.
“We expect short dips in gold market but see continued strength in demand, keeping the overall trend sideways to higher,” said David Meger, director of metals trading at High Ridge Futures.
On Thursday, the World Gold Council provided its 2024 outlook for gold, highlighting monetary policy as one of the factors to watch out for in the coming year, along with geopolitical risks and central bank buying.
(With files from Reuters)
This article was published by: Jackson Chen
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