Spot gold drops as U.S. jobs data strengthens dollar

January 13, 2025 (MLN): Gold spot prices decreased by 0.01% ($0.19) at $2,689.18 per ounce, as of [11:22 pm PST] from the prior day's close of $2,689.37 per ounce.

U.S. gold futures shed 0.1% to $2,712.

Gold prices edged lower on Monday as a stronger-than-expected U.S. jobs report reinforced the Federal Reserve's cautious stance on rate cuts and boosted the U.S. dollar, weighing on the bullion.

An unexpectedly strong nonfarm payrolls report on Friday indicated a resilient U.S. economy, as Reuters reported.

This supported the Fed's cautious stance toward policy easing.

Additionally, President-elect Donald Trump's pledges for steep tariff hikes on imports could stoke inflation.

The data put the dollar on a strong note, which makes the greenback-priced bullion more expensive for foreign buyers.

The focus is now on monthly U.S. inflation data due later this week, Reuters further added.

This data will be closely watched, as will speeches by several Fed officials, for any signs of a crinkle in the U.S. economy.

Such indications could stem the rally in the dollar and Treasuries, potentially lifting hopes of a rate cut.

"Weaker U.S. data ahead will be the much-needed catalyst here in taking some heat off the 'economic resilience' story and call for a meaningful reversal in yields.

However, this week's data calendar still suggests a cautious outlook for now," IG market strategist Yeap Jun Rong said.

Traders now expect the Fed to hold rates at its meeting later this month and expect only one rate cut this year, in June, Reuters noted.

"After a very strong December jobs report, we think the cutting cycle is over," BofA Global Research said in a note.

Bullion is used as a hedge against inflation, although higher interest rates reduce the non-yielding asset's appeal, it added.

"Investors appear to be bracing for renewed uncertainty as Trump takes office and implements his economic policies," ANZ analysts said in a note.

Spot silver fell 0.6% at $30.21 per ounce, platinum dropped 0.4% to $960.54, while palladium held steady at $947.40.

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