Gold drops to $1,700.03 as US jobs data fans hefty Fed rate-hike expectations

Gold prices fell on Friday, after a better-than-expected US jobs report cemented expectations the Federal Reserve would implement steep interest rate hikes.

Spot gold was down 0.6% at $1,700.03 per ounce, as of 12:37 p.m. EDT (1802 GMT). Prices have risen about 2.4% so far this week. U.S. gold futures settled 0.7% lower at $1,709.30.

"The market is looking at the stronger-than-expected payrolls report as further impetus for the Fed to raise yet another 75 bps at the early November meeting," said Tai Wong, a senior trader at Heraeus Precious Metals in New York.

"If bullion doesn't hold support at $1,690, it could retest $1,660 level. Market will be now be focused on key inflation data next week, as well as the Fed minutes." Data showed U.S. employers hired more workers than expected in September, while the unemployment rate dropped to 3.5%.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Following the data, the dollar firmed against its rivals, making gold more expensive for other currency holders.

Benchmark U.S. Treasury yields also climbed.

"Gold traders once again are deciding to focus more on Fed policy and less on the geopolitics that might prompt some safe-haven demand," said Jim Wyckoff, senior analyst at Kitco Metals.

Meanwhile, physical gold prices flipped to a discount in India this week as elevated local rates amid a dive in the rupee dampened festive demand, with higher prices playing spoilsport across other Asian hubs as well.

Silver eased 2.3% to $20.21 per ounce, but was on track for its biggest weekly rise since late-July, up about 6.3% so far.

Platinum dipped 0.7% to $915.44, but was still headed for its best week since June 2021. Palladium dropped 3.1% to $2,191.17.