Gold Prices Plummet on Strong US Jobs Data, Boosting Rate Hike Bets

Gold prices plummeted on Friday after the US jobs data exceeded expectations, boosting bets of an interest rate hike by the Federal Reserve as soon as this month. Spot gold fell 1.1% to $4,422.91 per ounce by 10:50 a.m. EDT (1447 GMT), putting it on track for a mild weekly decline.

U.S. job growth accelerated sharply in August while the unemployment rate held steady at 4.1%, pointing to a still stable labor market and keeping an interest rate hike from the Federal Reserve this month on the table. Short-term interest rate futures prices now imply about a 65% chance of an increase in the U.S. policy rate at the Fed's September 15 to 16 meeting, up from about 55% before the Bureau of Labor Statistics report.

Independent analyst Tai Wong noted that gold stumbled badly after the strong jobs data and pointed out that it makes a September rate hike much more likely unless we get a weak CPI report. The focus now shifts to next week's U.S. consumer and producer price inflation data, which could provide further clues on the Federal Reserve's policy path.

The US dollar jumped after the report, making greenback-denominated gold more expensive for holders of other currencies. Among other metals, spot silver fell 1.7% to $65.79 per ounce, platinum slipped 0.8% to $1,811.83 per ounce, and palladium dropped 1.6% to $1,397.75.