March 12, 2018 / 12:47 PM / 10 days ago

PRECIOUS-Gold prices dip as U.S. jobs data boosts risk appetite

    * Stocks jump to two-week high after U.S. data
    * Report shores up bets on more U.S. rate hikes
    * GRAPHIC-2018 asset returns:

 (Recasts, updates prices; adds comment, NEW YORK to dateline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, March 12 (Reuters) - Gold prices dipped on
Monday as the previous session's upbeat U.S. payrolls data
sparked a fresh rally in equities, shoring up expectations that
the U.S. Federal Reserve would press ahead with further interest
rate rises this year. 
    World stocks hit a two-week high on Monday after Friday's
strong jobs data helped offset investors' concerns about the
potential for a trade war between the United States and other
major economies.            
    Spot gold        lost 0.2 percent at $1,320.78 per ounce by
1:33 p.m. EST (1733 GMT), while U.S. gold futures         for
April delivery settled down $3.20, or 0.2 percent, at $1,320.80
per ounce.
    "Investors are now playing defense, so gold is sitting on
the bench today," said Rob Lutts, chief investment officer of
Cabot Wealth Management. 
    Gold could see support around the mid-$1,200s, he added,
noting bullion bounced off $1,239 an ounce in December then
$1,275 in July.
    Money market traders stuck to bets that the Fed would raise
interest rates three times this year after data released on
Friday showed U.S. job growth recorded its biggest increase in
more than 1-1/2 years in February.                         
    Gold is highly sensitive to rising rates, which lift the
opportunity cost of holding non-yielding bullion, while boosting
the dollar, in which it is priced.
    "Certainly higher interest rates are more competition to
gold, however when inflation is a reason for higher interest
rates, all bets are off and gold benefits," Lutts said.
    However, whether inflation will reignite and when remains
elusive, traders have said. 
    U.S. Treasury yields advanced after the jobs data, while
stock markets rallied as the numbers sparked a surge in risk
appetite. That weighed on the dollar on Monday, though the
impact of the softer U.S. currency on gold was muted.
    Gold slipped to its lowest in a week on Friday after the
payrolls report, having come under pressure earlier in the week
after failing to break through the $1,340 an ounce level for a
second time in two weeks.  
    "We are now getting within distance of the FOMC (Federal
Open Market Committee) meeting next week, with the rate hike
being expected to be executed," Saxo Bank's head of commodity
research Ole Hansen said. 
    "We've seen in the past that gold has been struggling ahead
of these announcements, so I think we're just being sucked into
the slipstream of that meeting."
    Meanwhile, silver        decreased 0.6 percent at $16.50 an
ounce. Palladium        dropped 2 percent at $976.30 an ounce,
while platinum        lost 0.5 percent at $959.74.

 (Additional reporting by Eileen Soreng in Bengaluru
Editing by Adrian Croft and Rosalba O'Brien)
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