Gold extends losses as strong US jobs data fuels rate-hike bets

Tehran - BORNA - Spot gold fell 0.6% to $4,402.86 an ounce after losing around 1% on Friday.

US gold futures for December delivery also dropped 0.6% to $4,447.60 an ounce.

Data released on Friday showed that US employment growth accelerated sharply in August, while the unemployment rate remained unchanged at 4.1%, pointing to continued resilience in the labor market and keeping the possibility of a Federal Reserve rate hike this month in focus.

Investors are now awaiting two key US inflation reports, with the producer price index due on Thursday and the consumer price index scheduled for Friday.

Tim Waterer, chief market analyst at KCM Trade, said the stronger-than-expected employment report had put some downward pressure on precious metals but was not enough on its own to make a September rate hike certain.

“The remaining key piece of the puzzle will come with this week’s US CPI report,” he said.

“If inflation data comes in strong, expectations for a Federal Reserve rate hike will strengthen, bond yields will rise and gold prices will come under further pressure.”

According to CME’s FedWatch Tool, traders currently see a 58.4% probability of a US rate increase at the Fed’s Sept. 15-16 meeting.

Gold is generally regarded as a hedge against inflation, but tends to lose some of its appeal in a high-interest-rate environment because it does not generate yield.

Meanwhile, US President Donald Trump said on Friday that if the Federal Reserve does not cut interest rates, the United States would stop trading with countries with which it runs a trade surplus, Reuters reported.

Among other precious metals, silver fell 0.6% to $65.80 an ounce, palladium declined 0.5% to $1,394, and platinum dropped 1.1% to $1,800.59 an ounce.

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