NEW YORK/LONDON: Gold prices declined as the US dollar ticked up against the euro after US jobs data showed a robust rise in jobs and wages and 10-year US Treasury yields peaked.

Non-farm payrolls rose by 200,000 jobs in January, the US Labor Department said, beating expectation of 180,000 and their largest annual gain in more than 8-1/2 years.

Average hourly earnings rose and boosted the year-on-year increase to 2.9 per cent, the largest rise since June 2009.

“The hawkish reading of the data is proving to be a trigger point for more downside pressure in gold in the short-term,” said Suki Cooper, precious metals analyst at Standard Chartered Bank. Spot gold dropped 1 per cent at $1,335.26 an ounce by 1:34 pm EST (1834 GMT), while US gold futures for April delivery settled down $10.60, or 0.8 per cent, at $1,337.30.

Benchmark 10-year Treasury yields extended their rise to more than 2.8 per cent reaching a 4-year high after the US jobs data was released.

“The fact that it’s gone up that fast that quick could force the Fed to act more aggressively before the March meeting if the 10-year gets to three per cent,” said Bob Haberkorn, senior market strategist at RJO Futures.

Higher interest rates make gold less attractive to investors because it does not pay interest. The Fed held interest rates unchanged after its latest policy meeting this week but raised its inflation outlook and flagged “further gradual” rate increases. Gold is set to end this week 1.1 per cent lower, after rising in six out of the last seven weeks and hitting its highest in 17 months last week at $1,366.07.

Reuters