Fed Hawkish Bets Spark Gold Selloff as US Jobs Data Surprises

Gold prices fell by about 0.80% on Friday after the release of an upbeat US jobs report, which boosted the Greenback and fueled speculation that the Federal Reserve could raise rates if inflation data next week comes in hotter than expected.

The Nonfarm Payrolls in August crushed estimates of 56K, coming in at 162K, while July's print was upward revised from -23K to 21K. The Unemployment Rate remained unchanged at 4.1%, reassuring Fed officials that a rate hike would not harm the labor market.

Fed Chairman Kevin Warsh said last week that the jobs market is 'consistent with full employment', and leaning hawkish, placing inflation as the foremost mission. Meanwhile, Fed Governor Christopher Waller stated that the Fed isn't rushing to raise rates if inflation cools, but a weak data release next week favors a rate increase at the FOMC's meeting.

Money markets have priced in a 61% chance for a rate increase by the Fed at the September meeting, up from 54% a day ago. US Treasury yields rose to a high of 4.81%, but erased post-NFP gains and are down to 4.768%. The Greenback remains in positive territory, as indicated by the US Dollar Index (DXY), which is up 0.13% at 99.13.