Gold dips to 2-month low

LONDON: Gold fell almost 2 percent to a two-month low after better-than-expected US non-farm payrolls fueled speculation the Federal Reserve will raise rates sooner rather than later.
Spot gold dipped 1.8 percent to its lowest since Jan. 2 at $1,175.40 an ounce earlier and was down 1.6 percent at $1,178.64 by 1401 GMT. The metal was heading for its fifth straight session of losses and for its biggest weekly loss for a month.
US gold for April delivery was down $17.80 an ounce at $1,178.30.
On the physical market, prices on the Shanghai Gold Exchange suggested physical demand for gold in China, the second biggest bullion consumer, remained at healthy levels.
Chinese gold prices were about $4-$5 an ounce higher than the global benchmark.
Sustained interest for physical bullion typically gives support to prices, cushioning any downside pressure.
Spot silver fell to its lowest level in two months at $15.77 an ounce, while palladium was down 0.6 percent at $816.50 an ounce and platinum lost 1.1 percent to $1,161.24 an ounce.
The dollar hit an 11-1/2 year high against a basket of major currencies, gaining more than 1 percent after US jobs data and bolstered by bolstered by strong US government bond yields.
A stronger US currency makes dollar-denominated gold more expensive for holders of other currencies, while the rise in returns from US bonds is negative for the metal, which pays no interest.
“The outcome was stronger than the forecast, there is a strong argument to increase rates, we can see that one with a stronger dollar and with the selloff in precious,” Societe Generale analyst Robin Bhar said.
“If we close below January levels, then the most obvious downside would be November’s lows of $1,131, obviously there would be big figure support around $1,150.”
Markets believe that the strong report could prompt the Fed to soon increase US interest rates, a move that would further boost the dollar, in turn hurting demand for non-interest-bearing assets such as gold.
“We continue to forecast a further strengthening of the US dollar which will keep gold under pressure,” Deutsche Bank said in a note.