Gold prices experienced a decline in Asian trade on Monday, extending losses from the previous week. The pullback in gold prices was influenced by a combination of robust labor market data and hawkish signals from the Federal Reserve, causing a reduction in expectations for early interest rate cuts.
Spot gold fell 0.4% to $2,031.60 per ounce, while gold futures expiring in April dropped 0.3% to $2,047.75 per ounce. The decline came after the release of stronger-than-expected nonfarm payrolls data for January, highlighting the continued resilience of the U.S. economy.
Federal Reserve Chair Jerome Powell’s late-Sunday interview further contributed to the downward trend. Powell emphasized the central bank’s prudent approach to monetary policy, given the economic strength. Traders responded by scaling back expectations of early interest rate cuts, as reflected in the CME Fedwatch tool.
The dollar surged to a near two-month high, and Treasury yields also advanced in Asian trade. The prospect of higher-for-longer interest rates has negative implications for gold, as it increases the opportunity cost of holding the precious metal.
Despite the recent decline, gold has found support from increased safe-haven demand, particularly amid escalating conflicts in the Middle East. Gold prices have maintained the $2,000 per ounce level, remaining within reach of record highs reached in late 2023.