Gold price drops 1% as U.S. jobs data rekindles worries of aggressive Fed

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Gold prices slipped more than 1% on Friday after a robust U.S. jobs data that fanned concerns that the Federal Reserve might stick with its aggressive monetary policy tightening.

Spot gold fell 1.1% to $1,783.41 per ounce by 9:21 a.m. ET (1421 GMT), after earlier hitting its highest since Aug. 10 at $1,804.46. U.S. gold futures dropped 1% to $1,797.40.

Data showed U.S. employers hired more workers than expected in November and raised wages despite mounting worries of a recession.

"With the U.S. jobs number coming in much stronger than expected... what we're seeing is the concern that the Fed may need to go further with their expected interest rate hikes," said David Meger, director of metals trading at High Ridge Future.

"You're going to see pressure on most asset classes today, not just the precious metals complex."

Following the report, the dollar climbed 0.6% against its rivals, making gold more expensive for holders of other currency. Benchmark U.S. Treasury yield also rose.

Fed funds futures prices still implied a better-than-even chance that the U.S. central bank will raise its policy rate just 50 basis points to a 4.25%-4.5% range in mid-December.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion.

"This (jobs) report is deemed too strong for the Fed's liking and suggests the U.S. central bank will be reluctant to back off," Jim Wyckoff, senior analyst at Kitco Metals, said in a note.

Sill, gold prices tracked their second straight weekly rise, up 1.6% so far this week, as the dollar dipped after Fed Chair Jerome Powell said that the U.S. central bank could scale back the pace of its interest rate hikes "as soon as December".

Spot silver fell 1.2% to $22.48 per ounce while platinum dropped 3.2% to $1,007.92, but were set for weekly gains.

Palladium was down 3.3% to $1,877.50.