Gold prices inched down on Monday after robust US jobs data late last week potentially increased the chances of more US interest rate hikes this year. Spot gold had dipped 0.2 per cent to $1,330.60 per ounce by 0257 GMT.

Spot gold had on Friday declined 1.2 per cent, its biggest one-day fall since December 7. Last week, the metal saw its largest weekly decline since the week-ending December 8. US gold futures were down 0.3 per cent at $1,333.30 per ounce.

Payrolls data

Non-farm payrolls rose by 200,000 jobs in January, the US Labour Department said, beating expectations of 180,000 and their largest annual gain in more than 8-1/2 years. Average hourly earnings rose and boosted the year-on-year increase to 2.9 per cent, the largest rise since June 2009.

“We have a bearish outlook for gold ... and yield-chasing behaviour and a rosy economic outlook should pressure the yellow metal lower,” said OCBC analyst Barnabas Gan. “The higher interest rate environment will actually fuel further risk-taking and is not good for gold.”

Futures markets had reacted on Friday after the jobs data by pricing in the risk of three, or even more, rate rises from the US Federal Reserve this year. The Fed had last week held interest rates unchanged, but raised its inflation outlook and flagged “further gradual” rate increases.

Higher interest rates make gold less attractive to investors because it does not pay interest.

Asian markets

Asian share markets stumbled on Monday as fears of resurgent inflation battered bonds, toppled Wall Street from record highs and sparked speculation central banks globally might be forced to tighten more aggressively.

“The fall in stocks has just started and it could just be a short-term correction before running higher. We should not read too much in to the fall in stocks and relate it to gold,” Gan said.

Meanwhile, hedge funds and money managers raised their net long position in COMEX gold contracts in the week to January 30 to their highest level since late-September, US Commodity Futures Trading Commission (CFTC) data showed on Friday.

Spot silver climbed 0.6 per cent to $16.69. Earlier, it touched $16.54, matching more than one-month lows hit on Friday. Silver fell 3.7 per cent on Friday to its worst one-day decline since December 15, 2016. It also saw its worst week since week-ending July 7, falling 4.6 per cent last week.

Platinum rose 0.2 per cent to $987.95, after touching more than two week low at $982 on Friday. Palladium fell 0.5 per cent to $1,041.50.