Gold Futures Settle Sharply Lower On Rate Hike Fears

Gold prices declined sharply on Thursday with a slightly stronger dollar and rising Treasury yields following a hawkish tone of the Federal Reserve’s monetary policy meeting minutes curbing the demand for the safe-haven commodity.

The minutes from the Fed’s December meeting showed that the central bank is prepared for earlier and faster rate hikes in the wake of an improvement in the labor market and elevated inflation pressures.

Analysts now expect the Fed will likely announce a rate hike in March.

The dollar index, which climbed to 96.39 in the Asian session, dropped to 96.04 later on in the day, and was hovering around 96.30 a little while ago, netting a gain of about 0.13%.

Gold futures for February ended down by $35.90 or about 2% at $1,789.20 an ounce.

Silver futures for March ended lower by $0.980 at $22.190 an ounce, while Copper futures for March settled at $4.3545 per pound, down $0.0590 from the previous close.

Traders now look ahead to the monthly jobs report. Economists expect employment to jump by 400,000 jobs in December after rising by 210,000 jobs in November. The unemployment rate is expected to edge down to 4.1% from 4.2%.

A report released by the Labor Department this morning showed a modest increase in first-time claims for U.S. unemployment benefits in the week ended January 1st.

The report showed initial jobless claims crept up to 207,000, an increase of 7,000 from the previous week’s revised level of 200,000. Economists had expected jobless claims to edge down to 197,000 from the 198,000 originally reported for the previous week.

A separate report from the Institute for Supply Management showed U.S. service sector growth slowed from a record high in the month of December.

The ISM said its services PMI slid to 62.0 in December from 69.1 in November, although a reading above 50 still indicates growth. Economists had expected the index to drop to 66.9.

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