Gold hits one-week low as solid US data fans rate-hike fears

Oct 10 (Reuters) – Gold prices fell to a one-week low on Monday, as solid US jobs data boosted expectations that the Federal Reserve will continue to deliver oversized interest rate hikes.

Spot gold was down 0.5% at USD 1,686.55 per ounce, as of 0623 GMT, after hitting its lowest since Oct. 3. US gold futures were down 0.8% at USD 1,695.70.

The dollar index was steady after touching a one-week high on Friday. A stronger greenback makes gold costlier for buyers holding other currencies.

“Gold prices are taking their cue from the build-up in rate-hike expectations from last week, brought on by the hotter-than-expected US job report,” IG market strategist Yeap Jun Rong said, adding that gold prices seemed to remain locked in a downward trend for now.

Data showed on Friday US job growth slowed moderately in September while the unemployment rate dropped, signalling a resilient economy and dousing hopes of a Fed pivot anytime soon.

Investors will now focus on the US inflation data due later this week. Headline consumer price inflation is seen slowing a touch to an annual 8.1%, but the core measure is forecast to accelerate to 6.5% from 6.3%.

While gold is often seen as a hedge against inflation, rising US interest rates increase the opportunity cost of holding the non-yielding gold.

Gold prices have declined more than USD 350 since surging past the USD 2,000-mark in March, amid aggressive US monetary policy tightening.

Spot gold is expected to fall into a range of USD 1,660 to USD 1,674 per ounce, as it has more or less broken a support at USD 1,689, according to Reuters technical analyst Wang Tao.

Holdings of SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, fell by 2.03 tonnes on Friday, marking its biggest outflow since late September.

Spot silver shed 1.9% to USD 19.73 per ounce after hitting a one-week low. Platinum fell 0.6% to USD 906.90, while palladium inched 0.1% lower to USD 2,179.49.

(Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)