Gold Down as Strong U.S. Jobs Data Offset Ukraine War Concerns

Gold was down on Monday morning in Asia. U.S. yields firmed after strong U.S. jobs data raised expectations of tighter U.S. monetary policy and offset safe-haven demand as the war in Ukraine triggered by the Russian invasion of Feb. 24 worsens.

Gold futures edged down 0.12% to $1,921.30 by 1:42 AM ET (5:42 AM GMT), remaining little changed. The dollar, which usually moves inversely to gold, inched down on Monday and U.S. Treasury yields rose alongside expectations of more interest rate hikes from the U.S. Federal Reserve.

The U.S. jobs report released on Friday was also stronger than expected. Non-farm payrolls rose by 431,000, while the unemployment rate was 3.6%, in March. Separate data showed that the Institute of Supply Management manufacturing purchasing managers index (PMI) for March was 57.1, while the manufacturing PMI was 58.8.

The data bolstered expectations that the Federal Reserve will tighten monetary policy further, with Fed funds futures pricing a near four-in-five chance of a 50-basis point interest rate hike in May 2022. Two-year yields hit a three-year high of 2.4930%.

In other central bank news, the Reserve Bank of Australia will hand down its policy decision on Tuesday, with the Reserve Bank of India’s decision following on Friday.

German defense minister Christine Lambrecht said on Sunday that the European Union must discuss banning imports of Russian gas.

This comes as Ukraine accused Russia of carrying out a “massacre” in the town of Bucha, which the Russian foreign ministry has denied.

Physical gold demand in India improved during the previous week as domestic prices dropped ahead of a holiday over the weekend. In China, a top consumer, purchases were limited as Shanghai extended a lockdown to curb its latest outbreak. The country also reportedly detected a new subtype of the omicron variant.

In other precious metals, silver inched up 0.1% and palladium jumped 2.2%, while platinum inched down 0.1%.