Gold retreats as dollar, yields firm; US inflation data in focus

Gold prices receded on Monday as the U.S. dollar and Treasury yields gained after traders digested Friday's jobs report, with attention turning to U.S. inflation data later this week.

Spot gold was down 0.4% at $1,934.89 per ounce by 0943 GMT, having slid to its lowest since July 11 on Friday before settling 0.4% higher. U.S. gold futures eased 0.3% to $1,969.80.

The U.S. economy added fewer jobs than expected in July, data showed on Friday, but solid wage gains and a decline in the unemployment rate back to 3.5% pointed to continued tightness in labor market conditions.

"Market participants still see the job market in the U.S. being tight... it's not a considerably strong slowdown in job activity," said UBS analyst Giovanni Staunovo.

The dollar regained some ground, while benchmark 10-year Treasury yields also ticked up after sliding from November highs on Friday.

More persistent wage pressures from labor market tightness suggest that investors should still keep an eye on inflation risks, said Yeap Jun Rong, a market strategist at IG.

U.S. consumer price index (CPI) data due on Thursday will be in focus to assess whether more rate hikes are needed to tame inflation.

"Our expectation is still that the trend points to low inflation and therefore the Federal Reserve doesn't have to hike rates, but we will see still a stronger reaction when the CPI data is released," Staunovo added.

Non-yielding gold is often sought as a safe investment against inflation, but tends to lose its sheen when rates rise.

John C. Williams, president of the Federal Reserve Bank of New York, expects that interest rates could begin to come down next year, the New York Times reported.

Spot silver fell 0.6% to $23.45 an ounce, while platinum added 0.1% to $922.85. Palladium gained 0.7% to $1,264.84.

Cre: Reuters