Gold fell below $2,000 as US dollar job growth picked up

April 10 (Reuters) – Gold fell below the key $2,000 level on Monday as the dollar advanced on strong US jobs numbers on Friday, while traders also braced for inflation readings this week that could influence a rate hike.

Spot gold fell 1% to $1,987.96 an ounce by 12:40 PM ET (1640 GMT), while US gold futures fell 1.2% to $2,002.90.

US Treasury yields rose after the US jobs report showed a strong hiring pace in March, giving room for the Federal Reserve to raise interest rates again.

Futures, said Daniel Pavilonis, senior market analyst at RJO.

Chances of a 25 basis point rate hike next month are now pegged at 70%which causes the dollar to rise, making dollar-denominated bullion less attractive to holders of other currencies.

Higher interest rates usually dampen the appeal of zero-yield gold, despite its traditional status as an inflation hedge.

Pavilonis added that another rate hike could “really corner the market” with gold potentially consolidating in a range.

Gold surpassed $2,000 last week as weak US jobs and services sector data made an interest rate hike next month less likely.

The US CPI reading is due at 1230 GMT (8:30 AM EST) on Wednesday, and will be followed later in the day by minutes from the latest meeting of the Federal Reserve.

Signs that the US inflation rate is increasing rapidly, which allows the Federal Reserve to stop raising interest rates sooner rather than later, could bring gold back to recent highs, said Han Tan, senior market analyst at Exinity.

Silver fell 0.9 percent to $24.77 an ounce, platinum fell 1.5 percent to $992.25, while palladium fell 3.4 percent to $1416.17.

Additional reporting by Deep Vakil and Seher Daren in Bengaluru; Editing by Shonak Dasgupta and Susan Fenton

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