Gold Prices Plunge as Strong Jobs Report Reignites Fed Hike Fears
The recent US jobs report has sent shockwaves through the markets, with the Federal Reserve (Fed) hawks gaining momentum in their push for a September interest rate hike. The strong Nonfarm Payrolls figure exceeded forecasts, coming in at 162K, while the Unemployment Rate remained steady at 4.1%. This data suggests that the labor market remains solid, which could potentially lead to higher inflation and interest rates.
As a result, money markets have raised the odds of a Federal Reserve interest rate hike at the September 15-16 meeting to 60%, as reported by Prime Terminal. The US Treasury yields rose following the report, pushing the US Dollar Index (DXY) up slightly.
The reaction has been swift, with the Gold price diving over 0.40% on Monday to $4,412. This comes after reaching a daily high of $4,435 earlier in the day. The XAU/USD pair is currently trading below its 100-day Simple Moving Average (SMA) at $4,350.
Looking ahead, traders will be eyeing the release of US producer-side data on Thursday and the Consumer Price Index (CPI) on Friday. These numbers could potentially drive the next catalyst for Gold prices.