Gold Prices Weaken Amid Rising Oil Costs and Hawkish Fed Outlook

Gold prices hovered near $4,400 an ounce on Monday as stronger US employment data increased expectations for a Federal Reserve interest rate hike later this month. The strong jobs report added to inflation concerns by raising oil prices, which can feed directly into inflation.

The unemployment rate remained at 4.1% in August, and the number of new jobs created was significantly higher than expected, with US employers adding 162,000 jobs. This has made investors more confident that the Federal Reserve could raise interest rates at its September 15 to 16 meeting.

Markets are now pricing roughly a 60% chance of a September rate hike, up from around 50% before the jobs report. Higher interest rates can weigh on gold because it does not generate interest or dividends, and when yields rise, investors have more incentive to hold interest-generating assets instead.