Gold prices fell on Monday as stronger-than-expected US jobs data reinforced expectations that interest rates could remain higher, while investors turned their attention to this week’s inflation readings for further clues on the Federal Reserve’s policy direction.
Spot gold declined 0.7% to US$4,398.13 an ounce as of 7:10 GMT, after falling 1% on Friday. US gold futures for December delivery also eased 0.7% to US$4,443.60.
The pullback followed data showing US job growth accelerated sharply in August, while the unemployment rate remained steady at 4.1%. The stronger labour market has kept the possibility of a rate hike at the Federal Reserve’s September 15-16 meeting on the table.
Investors are now awaiting the US producer price index (PPI) on Thursday and consumer price index (CPI) on Friday, with both reports expected to influence expectations for the Fed’s next policy move.
“The jobs number delivered a clear upside surprise and put some pressure on the metal, but it wasn’t a complete slam dunk for a September rate hike. The real missing piece of the puzzle arrives this week with US CPI,” said Tim Waterer, chief market analyst at KCM Trade.
Traders are currently pricing in a 58.4% chance of a rate hike at the September meeting, according to CME’s FedWatch tool, up from 55% before Friday’s jobs data.
Higher interest rates typically weigh on gold as the non-yielding asset becomes less attractive compared with interest-bearing investments. A stronger inflation reading could further strengthen expectations for higher rates and put additional pressure on bullion.
Meanwhile, other precious metals also moved lower. Spot silver fell 1% to US$65.53 an ounce, platinum declined 0.8% to US$1,806.59 and palladium eased 0.5% to US$1,393.76.
Reuters
