By Amrith Ramkumar and David Hodari
Gold prices fell Friday after the latest jobs report showed that the U.S. economy added more jobs than expected and that wage growth picked up.
Gold for April delivery was down 0.6% at $1,339.60 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have fallen slightly since hitting their highest level since August 2016 last week, as the dollar has stabilized and Treasury yields have surged.
A stronger dollar makes gold more expensive for overseas buyers. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, was up 0.7% on Friday.
Friday's report showed the unemployment rate hovered at its lowest level in 17 years and wage growth reached its strongest pace since the recession. Investors' rising expectations for higher inflation and more interest-rate increases this year could weigh on gold, according to some analysts. The precious metal struggles to compete with yield-bearing assets such as Treasurys as borrowing costs rise.
The yield on the benchmark 10-year U.S. Treasury note pierced 2.8% following Friday's report.
"Higher rates do not bode well for gold bulls," said Bob Haberkorn, senior market strategist at RJO Futures. "If you can get 2.8% locked in for 10 years, that's a good deal."
Mr. Haberkorn said Friday's report could add to trader bets that the Federal Reserve could raise rates four times this year. The central bank has penciled in three increases for this year. On Wednesday, it left rates unchanged but reiterated plans to raise them gradually as inflation moves closer to its 2% target. Some analysts viewed Friday's increase in wage growth as a sign inflation is finally picking up.
Still, some investors expect gold to continue marching higher as more investors use the precious metal to hedge against an unexpected inflation surge that could roil markets.
Among base metals, copper for March delivery was up 0.1% at $3.2120 a pound. The industrial metal sits near four-year highs, boosted by favorable global demand and the prospect of supply disruptions with several mining labor contracts up for renegotiation this year.
Some analysts have said they expect base metals trading activity to pick up after China's Lunar New Year holiday later this month, as China is the world's largest consumer of copper and other industrial raw materials.
Write to Amrith Ramkumar at [email protected] and David Hodari at [email protected]