Investors await US inflation data this week for further clues on the Federal Reserve’s policy direction
London: Gold prices fell on Monday as stronger-than-expected US jobs data reinforced expectations that interest rates could rise further, while investors looked ahead to key US inflation reports due later this week.
Spot gold was down 0.6 per cent at US$4,402.86 per ounce by 0420 GMT, after declining 1 per cent on Friday.
US gold futures for December delivery fell 0.6 per cent to US$4,447.60 per ounce.
Data released on Friday showed that US job growth accelerated sharply in August, while the unemployment rate remained unchanged at 4.1 per cent, suggesting an improvement in labour market conditions and keeping the possibility of a rate increase this month on the table.
Investors are now focused on US Producer Price Index (PPI) data due on Thursday, followed by Consumer Price Index (CPI) figures on Friday.
Tim Waterer, Chief Market Analyst at KCM Trade, said the stronger jobs data had weighed on gold prices but had not completely cemented expectations of a September rate increase.
“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,” he said.
“A strong inflation print would reinforce expectations of a Fed hike, lift yields further and weigh more heavily on gold.”
According to CME’s FedWatch tool, traders are pricing in a 58.4 per cent probability of a rate increase at the Federal Reserve’s 15-16 September meeting.
While gold is often viewed as a hedge against inflation, higher interest rates typically reduce the appeal of non-yielding assets such as bullion.
Meanwhile, US President Donald Trump said on Friday that unless the Federal Reserve cuts interest rates, he would stop trading with countries with which the United States runs a trade deficit.
On the Middle East front, Iran said it would intensify efforts to address problems caused by US sanctions.
Among other precious metals, spot silver fell 0.6 per cent to US$65.80 per ounce, platinum lost 1.1 per cent to US$1,800.59, and palladium declined 0.5 per cent to US$1,394.00.
Source: Emirates 24|7