Gold and Silver prices drop after unexpectedly strong US jobs data

Gold prices experienced a dip on Thursday, following unexpectedly robust U.S. jobs data for January, which dampened expectations for imminent interest rate cuts by the Federal Reserve.

Spot gold edged 0.3% lower, settling at $5,062.83 per ounce. U.S. gold futures for April delivery fell 0.3% to $5,084.30 per ounce. Silver also saw a retreat, with spot silver down 0.6% at $83.52 per ounce, after a 4% climb the previous day.

The stronger-than-anticipated employment figures suggest that Federal Reserve policymakers may opt to maintain interest rates at their current levels for a longer duration. This scenario typically makes non-yielding assets like gold less attractive, as lower interest rates reduce the opportunity cost of holding the precious metal.

Ole Hansen, head of commodity strategy at Saxo Bank, commented: "Gold eased back from above $5,100 and silver from above $86 after stronger-than-expected U.S. jobs data tempered expectations of imminent Fed rate cuts, lifting the dollar.”

The US economy added 130,000 jobs in January, significantly surpassing the 70,000 jobs forecast by Reuters-polling economists. This came after a downwardly revised 48,000 rise in December, with the unemployment rate falling to 4.3%.

Hansen added, "The renewed focus on incoming economic data suggests a degree of normalization following the recent volatility spike, while the upcoming Lunar New Year holiday in China may further dampen risk appetite and liquidity."

Investors are now keenly awaiting the weekly US jobless claims report later today, alongside crucial inflation data due on Friday, for further indications regarding the Fed's monetary policy trajectory.

Zain Vawda, an analyst at MarketPulseby OANDA, highlighted the significance of the upcoming data: "I think the CPI (inflation) print on Friday will be key. If we get a softer CPI print coupled with the jobs report data, that could keep gold from advancing much further and could see gold make a foray back below the $5000/oz mark."

In other precious metals, spot platinum shed 1.3% to $2,104.90 per ounce, while palladium was up 0.7% at $1,711.12.