Gold prices fall over 1% as strong US jobs data clouds outlook for rate cuts
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Gold prices slipped more than 1% on Friday after a stronger-than-expected U.S. jobs report dampened hopes for imminent Federal Reserve rate cuts this year, while silver soared to its highest level since 2012.Spot gold fell 1.1% to $3,316.13 an ounce, as of 02:28 p.m. ET (1828 GMT), but rose 0.8% for the week so far.U.S. gold futures settled 0.8% lower at $3,346.60.A U.S. Labor Department report showed non-farm payrolls increased 139,000 in May, compared with estimates for a rise of 130,000, according to economists polled by Reuters. The unemployment rate stood at 4.2%, in line with estimates.Data came in line with estimates, which is a negative for gold as the data suggests that the Fed is going to stay on hold for a little while, Marex analyst Edward Meir said.Fed policymakers are seen as waiting until September to cut rates, with just one more cut in view by December, based on trading in short-term interest-rate futures, which also showed traders backing away from bets that would pay off if the U.S. central bank delivered a third rate cut by the end of the year.Gold is considered a hedge against inflation and geopolitical uncertainty. But higher rates reduce the appeal of bullion as it yields no interest.On the trade policy front there was little clarity after the highly anticipated call between U.S. President Donald Trump and Chinese leader Xi Jinping on Thursday."These are very difficult negotiations and they're not going to be solved just on the phone. If the tariff headlines become negative, that's bullish for gold," Meir added.Spot silver fell 0.5% to $35.96, after hitting a more than 13-year high earlier.Gains in silver "look like were driven by speculative flows seeing it is way too cheap versus gold, the break above the $35/oz mark amplified the move," said Giovanni Staunovo, UBS analyst.Platinum rose 2.5% to $1,158.20, highest since March 2022, while palladium was up 3.9% to $1,045.45. Both the metals were on track for weekly gains.
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