Gold rises as bleak U.S. jobs data dents dollar

A one kilo Swiss gold bar and US dollars gold coins are pictured in Paris on February 20, 2020.

JOEL SAGET| AFP via Getty Images

Gold prices edged higher on Monday, as weaker-than-expected U.S. jobs data re-ignited concerns over a recovery in the world’s largest economy, pressuring the dollar and boosting bullion’s appeal.

Fundamentals

Spot gold rose 0.1% to $1,813.99 per ounce by 0040 GMT. U.S. gold futures gained 0.2% to $1,816.50.

The dollar fell from an over two-month peak on Friday after a U.S. jobs report indicated a slow recovery from the impacts of the COVID-19 pandemic. A weaker dollar makes gold cheaper for holders of other currencies.

The employment report on Friday showed job losses in manufacturing and construction, two sectors which have been propping up the economy.

U.S. President Joe Biden and his Democratic allies in Congress forged ahead with their $1.9 trillion COVID-19 relief package on Friday.

Capping gold’s gains, yields on the benchmark 10-year Treasury note soared to levels not seen in nearly a year. Higher yields increase the opportunity cost of holding non-yielding bullion.

Breakevens on 10-year Treasury Inflation-Protected Securities, which measure average annual inflation expectations for the coming decade, have jumped to 2.19%, the highest level since mid-2018.

Gold is considered a hedge against inflation and currency debasement, likely from widespread stimulus.

Speculators reduced their bullish positions in COMEX gold and silver contracts in the week to Feb. 2, data showed on Friday.

Physical gold demand picked up in China last week ahead of the Lunar New Year festival, while Indian retail buyers cheered a sharp dip in domestic rates.

Spot silver gained 1.1% to $27.12 an ounce, platinum rose 0.7% to $1,130.91 and palladium was steady at $2,336.29.