Gold Prices: Strong U.S. Jobs Report Blunts Gold Allure

Gold PricesA strong U.S. jobs report crimped gold prices on Friday, a day after the yellow metal capped its brightest quarter in 30 years.

The gold price for June delivery fell as much as two percent to $1,210 a troy ounce after the closely watched jobs report indicated that the U.S. added more jobs than economists forecast in March.

The gold price spiked 16.5% to $1,234 an ounce in the first quarter ended on Thursday. It was the best quarterly gain for the precious metal since 1986, thanks to a mixture of early 2016 stock market turmoil and a lack of confidence in central banks worldwide.

The U.S. created 215,000 new jobs in March, showing strength for the world’s largest economy.

Economists surveyed by MarketWatch had forecast a 203,000 increase in new nonfarm jobs, while economists polled by Reuters put their average estimate at 205,000 jobs.

The unemployment rate, on the other hand, inched up to five percent from 4.9%. However, labor participation—those seeking workers—increased, pushing the “labor participation” rate up to 63%. That was the highest level in two years.

The data strengthened the U.S. dollar and short-dated U.S. treasuries. The U.S. Dollar Index, which tracks the greenback against a basket of six currencies, is up 0.3% at 94.90.

The solid job report may reassure the Federal Reserve to hike rates. The prospect of higher rates is bullish for the greenback but dents assets priced in the currency, like gold and silver. Higher rates also make owning zero-yielding gold less attractive relative to other yield-bearing assets.

Financial markets forecast a 30% chance of an interest-rate hike at the Fed’s June policy meeting, a 50% chance of such a move in September and a 64% probability at the December meeting, Reuters reported, citing CME FedWatch.

The silver price fell 3.5% to $14.93 a troy ounce following the jobs report. The metal finished the first quarter with a 12% gain on Thursday.

The gold price is 17.8% higher than its 52-week high recorded on December 3, but 2.4% lower than its year-to-date high logged on March 11.