Gold prices drop over 2% as firmer dollar, US rate outlook weigh

Gold fell more than 2% on Monday, as a stronger dollar weighed on greenback-priced bullion, while higher energy costs fuelled inflation concerns and further dimmed the prospects for near-term reductions in interest rates.

FUNDAMENTALS

* Spot gold was down 2.5% at $5,041.89 per ounce, as of 0048 GMT. U.S. gold futures for April ‌delivery were down ⁠2.1% at $5,049.40.


* ⁠The dollar hovered near a three-month high hit last week, making bullion more expensive for holders of other currencies. * The U.S. 10-year Treasury yields climbed to a near one-month high, raising the opportunity cost of holding non-yielding gold.

* Oil-driven inflation fears and delayed rate-cut expectations likely strengthened U.S. yields and the dollar, outweighing safe-haven demand and pushing ⁠gold down.

* ‌Raising geopolitical tensions in the Middle East, Iran on Monday named Mojtaba Khamenei to succeed his father Ali Khamenei as ⁠supreme leader, signalling that hardliners remain firmly in charge.

* Crude oil prices rose sharply to over $100 per barrel amid fears of tighter supply and prolonged disruptions to oil shipments through the Strait of Hormuz.

* Investors expect the U.S. Federal Reserve to keep interest rates steady at the end of its two-day meeting on March 18, as per CME Group's FedWatch tool. The ‌odds of a June hold, which were below 43% last week, climbed to more than 51%.

* Share futures slid in Asia on Monday ⁠as the inflationary pulse from surging oil prices threatened to raise living costs, and perhaps interest rates, across the globe.

* Meanwhile, data on Friday showed that U.S. nonfarm payrolls decreased by 92,000 jobs last month, compared with economists' expectations for a 59,000 climb, while the unemployment rate rose to 4.4%. * Spot silver dropped 4% to $80.99 per ounce. Spot platinum fell 3.8% to $2,054.65, and palladium was down 2.1% at $1,590.32.

DATA/EVENTS (GMT)

0130 China PPI YY February

0130 China CPI YY February