Gold Plunges as Strong Jobs Data Boosts Rate Hike Expectations

Gold prices fell on Monday due to strong US jobs data that increased expectations of an interest rate hike by the Federal Reserve this month.

The August employment report showed a surprise increase in job additions, with employers adding 162,000 jobs, exceeding market forecasts. This has raised concerns about inflation and the potential for higher interest rates, which is generally seen as a headwind for gold.

According to Peter Grant, senior metals strategist at Zaner Metals, persistently firm inflation data this week could strengthen expectations for another Fed increase, putting additional pressure on the metal. The August producer price index is scheduled for Thursday, September 10, followed by the consumer price index on Friday, September 11.

Independent analyst Tai Wong said that the strength of the payrolls report made a September rate increase significantly more plausible unless CPI delivers a weak reading, which would be crucial for gold's price movement. The recent retreat in gold has left it elevated due to tensions between the US and Iran and its link to energy markets.