Investing.com - Gold futures declined in European trade on Monday, as better than expected U.S. employment data sparked speculation the Federal Reserve could raise interest rates sooner and faster than expected.
Gold for June delivery on the Comex division of the New York Mercantile Exchange dipped $4.50, or 0.37%, to trade at $1,219.00 a troy ounce by 08:02GMT, or 4:02AM ET.
On Friday, gold retreated $12.10, or 0.98%, after robust U.S. jobs data indicated strength in the economy and stoked speculation the Fed could raise interest rates soon.
According to the U.S. Labor Department, the economy added 215,000 jobs last month, exceeding expectations for a gain of 205,000. Average hourly earnings increased by a more-than-expected 0.3%, while the unemployment rate ticked up to 5.0% from an eight-year low of 4.9%, as more people entered the labor force.
Other pieces of data released Friday included the ISM manufacturing index for March, which came in above estimates at 51.8.
The upbeat data bolstered the argument that growth in the U.S. is strong enough for the Fed to raise interest rates in coming months.
Investors also digested hawkish comments from Cleveland Fed President Loretta Mester. In prepared remarks, she said that the Fed should still raise interest rates gradually this year given the economy's resilience.
Losses were limited amid the view that the Fed will still remain cautious on interest rate hikes this year. Fed Chair Janet Yellen said last week the U.S. central bank should proceed only cautiously as it looks to raise interest rates, pushing back against a handful of colleagues who suggested another move may be just around the corner.
A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Prices of the yellow metal are up nearly 14% so far this year as expectations faded that the Fed would move to normalize interest rates due to fears over a China-led global economic slowdown.
Gold is sensitive to moves in U.S. rates, as a rise would lift the opportunity cost of holding non-yielding assets such as bullion.
In the week ahead, market players will be turning their attention to Wednesday’s minutes of the Federal Reserve’s latest policy meeting for fresh clues on the timing of the next U.S. rate hike.
There are also more than a half-dozen Fed speakers on tap for the coming week, including comments by Fed Chair Yellen on Thursday.
Investors will also be looking ahead to U.S. data on service sector activity for further indications on the strength of the economy.
Also on the Comex, silver futures for May delivery shed 6.6 cents, or 0.44%, to trade at $14.98 a troy ounce during morning hours in London, while copper futures slid 0.3 cents, or 0.14%, to $2.160 a pound.
Prices of the red metal dropped to a more than one-month low of $2.147 earlier in the day, as concerns over a slowdown in demand from top consumer China weighed.