Gold edges lower on firmer dollar after strong US jobs data

Gold prices dipped on Thursday, as the U.S. dollar firmed after stronger-than-expected January jobs data dented expectation for near-term interest rate cuts, while investors awaited inflation data due on Friday for more monetary policy cues.

Spot gold XAU= edged 0.3% lower to $5,065.98 per ounce by 0318 GMT. It closed Wednesday with a more than 1% gain.

U.S. gold futures GCcv1 for April delivery lost 0.2% to $5,087.30 per ounce.

"The stronger jobs report leading to a slight pare back in Fed rate-cut expectations may have played a role in gold's lacklustre move," said Christopher Wong, a strategist at OCBC.

The U.S. dollar index .DXY rose following the surprisingly strong employment report that suggested underlying U.S. economic health. A stronger dollar makes greenback-priced metals more expensive for other currency holders. USD/

"Sensitivity to the dollar, yield repricing, and uncertainty around Fed policy should continue to pose two-way risks for gold in the interim," Wong said.

U.S. job growth unexpectedly accelerated in January and the unemployment rate fell to 4.3%, though the largest increase in payrolls in 13 months likely exaggerates the labour market's health, as revisions showed the economy added only 181,000 jobs in 2025 instead of the previously estimated 584,000.

The U.S. budget deficit will grow slightly in fiscal 2026 to $1.853 trillion, the Congressional Budget Office forecast on Wednesday, showing that on balance, President Donald Trump's economic policies are worsening the country's fiscal picture amid low economic growth.

The Federal Reserve will keep rates unchanged through Chair Jerome Powell's term ending in May but cut immediately afterward in June, a Reuters poll showed, with economists warning that policy under his likely successor, Kevin Warsh, could become too loose.

Investors now await the weekly jobless claims report on Thursday and inflation data on Friday for more cues on the Fed's monetary policy path.

Spot silver XAG= fell 0.3% to $83.81 per ounce, after a 4% climb on Wednesday.

Spot platinum XPT= shed 0.3% to $2,126.52 per ounce, while palladium XPD= rose 1.4% to $1,722.67.

-Ishaan Arora/Reuters