Gold Prices Plummet as Strong Jobs Report Ignites Fed Hike Speculation
The US Nonfarm Payrolls exceeded forecasts on Friday, igniting speculation that the Federal Reserve might resume its tightening cycle if inflation reaccelerates late this week. The August employment smashed forecasts of 56K, coming in at 162K, while July's print was upwardly revised from -23K to 21K. The Unemployment Rate remained steady at 4.1%. As a result, the US Treasury yields rose, pushing the US Dollar higher. The US Dollar Index (DXY) dropped by 0.25% to 98.91.
The strong payrolls report sparked money markets to raise the odds of a Federal Reserve interest rate hike at the September 15-16 meeting to 60%, according to Prime Terminal. This week, traders will eye the release of US producer-side data on Thursday and the Consumer Price Index (CPI) on Friday.
The reaction in the gold market was immediate, with Gold (XAU/USD) price diving over 0.40% on Monday. The XAU/USD pair trades at $4,412 after reaching a daily high of $4,435. The Relative Strength Index (RSI) is neutral to downward-trending, hinting that a leg down is on the cards for Gold.