Gold Prices Plunge Amid Rising Rate Hike Odds
Gold prices have been trading between $4,395 and $4,402 per troy ounce on Monday after failing to break above the overhead supply at $4,480 to $4,500 last week.
The recent US naval strikes against Iranian oil tankers in the Persian Gulf has led to a sharp increase in Brent crude prices, reaching its highest since July 24. However, gold went down as the same energy shock that should generate safe-haven demand is instead generating an inflation impulse, pushing the Federal Reserve towards a rate hike.
The market's sensitivity to a single input, specifically the September 15-16 FOMC meeting, has been evident in recent days. The probability of a 25-basis-point hike at the meeting has increased to around 60% after Friday's payrolls report, with Fed funds futures showing a significant shift.
US nonfarm payrolls increased by 162,000 in August, exceeding expectations, and the unemployment rate remained unchanged at 4.1%. This data has reinforced the picture of a labor market that has stayed resilient despite restrictive monetary conditions.