Gold eases as firmer dollar offsets support from bets on Fed pause

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  • Gold hovers near one-week lows
  • U.S. dollar up 0.1%
  • Asian shares extend global rally on Fed pause optimism

By Kavya Guduru

June 5 (Reuters) – Gold prices edged lower in rangebound trading on Monday as the dollar firmed after a strong U.S. payrolls report, overshadowing support from prospects that the Federal Reserve would pause its rate hikes this month.

Spot gold was down 0.2% at $1,944.69 per ounce as of 0256 GMT, trading in a $6 range. Prices were hovering near their lowest levels since May 30.

U.S. gold futures fell 0.4% to $1,961.30.

Gold prices slipped more than 1% on Friday after data showed U.S. nonfarm payrolls rose by 339,000 jobs last month, exceeding a 190,000 forecast by economists polled by Reuters. But the unemployment rate surged to a seven-month high of 3.7% from a 53-year low of 3.4% in April.

The higher unemployment reading prompted markets to price in a 79.3% chance of the Fed leaving interest rates unchanged at its June 13-14 meeting, according to the CME FedWatch Tool.

“Money markets continue to favour a pause (as did comments from Fed vice chair nominee Philip Jefferson), so it may limit the downside for gold even if it has lost some safe-haven flows from debt-ceiling concerns… The question now is whether (gold) will break support at $1,934 to bring $1,900 into focus,” City Index senior market analyst Matt Simpson said.

Non-interest-bearing bullion tends to become less attractive in a high interest rate environment.

The U.S. House of Representatives last week passed a bill to suspend the $31.4 trillion debt ceiling, and averted a first-ever default.

The dollar index .DXY rose 0.1%, making greenback-priced bullion less affordable for overseas buyers.

Asian shares extended a global rally on optimism that the Fed would pause its rate hikes this month, while oil prices jumped. MKTS/GLOB

Spot silver inched down 0.2% to $23.53 per ounce, platinum rose 0.2% to $1,005.00 per ounce, while palladium shed 0.6% to $1,412.46.

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