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Gold prices slipped on Monday as solid U.S. jobs report lifted expectations for an aggressive rate hike by the Federal Reserve. In turn, it strengthened the U.S. dollar and Treasury yields. The stronger greenback raises bullion prices for holders of rival currencies. Meanwhile, higher yields increase the opportunity cost of owning the non-interest-bearing metal. However, gold remained supported by the Ukraine crisis and sanctions against Russia.

Spot gold is currently trading at $1,928.10 per ounce as of 0740 GMT.

On Friday, the Labor Department reported that U.S. unemployment plunged to a two-year of just 3.6% in March. It strengthened investors’ bet that the Feds would aggressively lower inflation. Fed funds futures are already priced in for an 80% chance of a 50-basis-point hike in May.

OANDA senior analyst Jeffrey Halley suggested that higher U.S. yields and the stronger dollar are now the main drivers of gold prices. They have eclipsed the impact of the crisis in Ukraine.

On the technical front, Reuters analyst Wang Tao predicted spot gold to slide down to $1,898 since it fell below the support level at $1,924.

DailyFX senior strategies Christopher Vecchio suggested that gold’s outlook for the second quarter is mixed. He believes that there are two likely paths forward for gold prices. The first is sideways. That will happen if Russia’s invasion of Ukraine continues, which would keep inflation expectations high and force central banks to raise rates. The second is downwards. In contrast to the first, the end of the Russia-Ukraine war would push real yields higher and sink inflation expectations.

FXStreet senior analyst Dhwani Mehta added that gold’s daily chart favors bears as Russia-Ukraine peace talks offer a ray of hope. She explained that the 14-day Relative Strength Index is now trading in the negative territory. Mehta sees resistance at 1,915 an ounce. A drop below that level could send the bullion further to $1,900 or $1,890. On the upside, gold could retest $1,940 and then the horizontal 21-DMA at $1,950.

In physical trading, gold demand in India improved as prices fell to their lowest since February 25. There was also strong demand during the Gudi Padwa festival. However, the metal is still trading at a hefty discount, as much as $35 an ounce. In China, COVID-19 lockdowns muted demand. Dealers offered higher discounts of $2-$6 per ounce.