Gold slid to its lowest in nearly four months on Monday after the latest U.S. jobs data boosted stock markets and Treasury yields, crimping demand for safe-haven bullion. Spot gold had fallen 0.5 percent to $1,207.03 per ounce by 0738 GMT. It earlier touched its lowest since March 15 at $1,204.45. U.S. gold futures for August delivery dropped 0.3 percent to $1,206.20 per ounce. “The fall in gold prices is very much underpinned by yield-chasing behavior,” said OCBC analyst Barnabas Gan.
Higher yields on assets such as U.S Treasuries increase the opportunity cost of holding non-yielding bullion. “If (treasury) yields in the U.S. and Europe move higher, that will most likely cap any gains in gold and will test the downside again,” said Jeffrey Halley, senior market analyst at OANDA. The 10-year U.S. Treasury yield hit a two-month high of 2.398 percent on Friday.
Data on Friday showed U.S. non-farm payrolls jumped by 222,000 jobs last month, beating expectations of a 179,000 gain. The dollar steadied and Asian equities remained supported by Friday’s data. A stronger dollar makes gold more expensive for buyers outside the United States. The market also awaited U.S. Federal Reserve Chair Janet Yellen’s testimony on Thursday which could provide further hints on the central bank’s stance on interest rates.
Meanwhile, Reuters technical analyst Wang Tao said spot gold may fall more to $1,204 per ounce, as suggested by its wave pattern and a Fibonacci projection analysis. Holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.63 percent to 835.35 tonnes on Friday from 840.67 tonnes on Thursday.
Hedge funds and money managers in the week to July 3 reduced their net long positions in COMEX gold and silver for a fourth straight week, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday. Among other precious metals, silver fell about 2 percent to $15.27 per ounce.
In the previous session, it touched $14.86 an ounce, its lowest in 15 months in what appeared to have been driven by an accidental order, according to traders. Palladium declined 0.3 percent to $836.18 per ounce after hitting its lowest since June 2 on Friday. Platinum dropped 0.5 percent, to $899.00 per ounce. It touched its lowest since May 4 during the session.