Gold Price Plunges Amid Rising Hopes for September Fed Rate Hike

The price of gold (XAU/USD) dropped to near $4,410 in the early Asian session on Tuesday as strong US jobs data boosted expectations for a Federal Reserve interest rate hike this month.

The August US Nonfarm Payrolls (NFP) report showed 162K new jobs were added, exceeding market consensus of 56K. The Unemployment Rate remained steady at 4.1% during the same period.

Ole Hansen from Saxo Bank noted that gold and silver have moved in the opposite direction to energy prices since Friday's strong US jobs report lifted bond yields and reinforced expectations of a Fed rate hike on September 16.

The probability of an interest rate hike at the Fed's policy meeting next week increased to 60% from 50% prior to the jobs data release, according to the CME FedWatch tool. Analysts are closely watching US inflation data later this week, with hotter readings reinforcing a September hike and cooler readings favoring a rate hold.