Precious metals edge lower after strong US jobs data

Gold prices saw a massive dip on Friday amid stronger than expected US September jobs data, which faded expectations of a near-term Federal Reserve rate cut.

In the international markets, Comex gold for December delivery went lower by 0.14 per cent to $4,054.46 per ounce, while silver fell nearly 2 per cent to $49.34 an ounce. Modi said the prolonged US government shutdown has disrupted key economic releases, with the Bureau of Labor Statistics merging October and November jobs data into a combined report, while GDP data has also been pushed back as well, increasing market uncertainty.

Meanwhile, geopolitical developments related to a potential Russia-Ukraine peace discussions, have also impacted safe-haven asset, he added. Minutes from the Federal Open Market Committee (FOMC) October meeting revealed that Fed officials proceeded with a interest rate cut despite voicing concerns that such a move could elevate inflation risks and potentially weaken consumer confidence.

Analysts said that the dollar index remained strong against its major crosses, sustaining above 100 mark, which acted as a factor in easing of gold prices, apart from adverse jobs data in the US. "The Labour Department’s closely watched release -- postponed due to the government shutdown -- showed nonfarm payrolls in September rising by 119,000, more than double the projected 50,000 increase, reinforcing the narrative of a resilient labour market," said Manav Modi, analyst–precious metal-research, Motilal Oswal Financial Services Ltd.

Market expectations for a December rate have now eased, with traders now pricing in around 30 per cent to 40 per cent probability of a rate cut, as traders weigh remarks from Federal Reserve officials alongside broader economic indicators.