Web desk: Gold prices moved lower on Thursday as the US dollar strengthened after better than expected January employment figures reduced hopes of an early interest rate cut. Investors are now focusing on upcoming inflation data for clearer signals about future monetary policy.
Spot gold slipped 0.3 percent to 5063.11 dollars per ounce in early trading. The metal had gained more than 1 percent in the previous session. US gold futures for April delivery also declined 0.3 percent to 5083.90 dollars per ounce.
Market analysts believe the solid jobs report pushed traders to scale back expectations of quick rate cuts from the Federal Reserve. The dollar index advanced after the employment data pointed to steady economic conditions in the United States. A stronger dollar makes gold more expensive for buyers using other currencies which can reduce demand.
Recent data showed that job growth picked up in January and the unemployment rate dropped to 4.3 percent. However revisions indicated that earlier payroll estimates were overstated. The updated figures suggest the labor market may not be as strong as initial numbers implied.
The Congressional Budget Office projected that the US budget deficit will rise to 1.853 trillion dollars in fiscal 2026. The forecast suggests that current economic policies could place additional pressure on public finances at a time of modest growth.
A recent survey indicated that the Federal Reserve may hold interest rates steady until the end of Chair Jerome Powell’s term in May and consider a cut in June. Economists also expressed concern that future leadership could adopt a more relaxed policy stance.
Traders are closely watching weekly jobless claims and the upcoming inflation report for further guidance on the direction of interest rates. Other precious metals also saw mixed movement. Silver declined 0.8 percent to 83.32 dollars per ounce after a strong rally a day earlier. Platinum fell 0.8 percent to 2113.79 dollars per ounce while palladium gained 0.9 percent to 1715.30 dollars.
In my view the recent dip in gold does not necessarily signal a long term weakness. Short term reactions to economic data often create volatility. If inflation remains elevated or fiscal concerns deepen investors may return to gold as a safe store of value.
Read more: Gold and silver prices drop sharply in global and local markets
