Gold extends decline for 9th day as fears of higher US rates weigh

BENGALURU: Gold prices edged lower for a ninth straight session on Thursday, as US data indicating tight labor market conditions raised worries about Federal Reserve keeping interest rates higher for sometime.

Spot gold eased 0.2% to $1,818.39 per ounce by 10:51 a.m. EDT (1451 GMT). US gold futures fell 0.2% to $1,830.40 per ounce. “The whole narrative of holding rates higher for longer is the big reason why people are removing positions from gold as the opportunity cost of holding it has risen,” Bart Melek, head of commodity strategies at TD Securities, said.

Since advancing above the key $2,000-per-ounce level in early May, gold prices have fallen nearly 12% as a hawkish rhetoric on rates from the Fed has lifted bond yields to their higher level in 16 years. The number of Americans filing new claims for unemployment benefits rose moderately last week, while layoffs declined in September, pointing to still-tight labour market conditions.

Market focus now shifts to September’s non-farm payrolls report on Friday, which is expected to show that employers added 170,000 jobs. If the jobs data comes stronger than expected, then market expectation of one more hike will rise, and with that gold prices could dip below $1,800, added Melek. Offering some respite to gold, the dollar index fell for the second straight session, making gold less expensive for other currency holders.