Gold subdued as strong US jobs data dents rate-cut hopes

Gold inched down on Friday as a stronger-than-expected U.S. jobs report reinforced expectations that the Federal Reserve will refrain from cutting interest rates at its December meeting.

Spot gold was down 0.1% at $4,072.87 per ounce, as of 0242 GMT. U.S. gold futures for December delivery edged 0.3% higher to $4,071.90 per ounce.

“Gold prices are consolidating at the moment, and we see the dollar has strengthened quite a bit and behind it, there is a lot of speculation whether the Fed will continue to cut interest rates or not,” GoldSilver Central MD Brian Lan said.

“I think now the market is unsure, and especially, now, when we are going to the end of December, we expect a lot of traders will be taking profit off their positions and that’s what we saw at the end of last week to this week.”

The dollar was on track on Friday for its strongest week in more than a month. A stronger dollar makes greenback-priced gold more expensive for holders of other currencies.

The closely watched US Labor Department report, delayed by the federal government shutdown, showed that September nonfarm payrolls increased by 119,000, more than double the estimated increase of 50,000.

Traders now see nearly a 39% chance for a Fed rate cut next month. Gold, a non-yielding asset, tends to do well in low-interest-rate environments.

Minutes from the Fed’s October meeting released on Wednesday showed it cut interest rates even as policymakers cautioned that doing so could risk entrenched inflation and a loss of public trust in the U.S. central bank.

Chicago Fed President Austan Goolsbee repeated on Thursday he is “uneasy” about frontloading interest-rate cuts, particularly with progress on inflation towards the Fed’s 2% goal looking to have stalled and starting to go the wrong way.

Elsewhere, spot silver slipped 0.5% to $50.35 per ounce, platinum climbed 0.4% to $1,521.41, and palladium was flat at $1,377.50.