Gold Slumps as Jobs Data, Hormuz Clashes Boost Rate-Hike Bets
Gold prices fell by as much as 1% to below $4,400 an ounce as stronger-than-expected US jobs growth and rising tensions in the Middle East raised prospects for an interest-rate hike. The Federal Reserve is set to meet on September 15-16, and traders are pricing in a roughly 60% likelihood of an increase in September.
The jobs report showed US nonfarm payrolls surged in August, with the unemployment rate holding steady. This has bolstered the argument for the Fed to raise rates, which would typically undermine support for gold as it doesn't pay interest.
Adding to inflation fears, Iran said it targeted three oil tankers and several US-linked ships in retaliation for American attacks on vessels over the weekend, raising concerns around energy flows from the region. Oil prices climbed, with benchmark Brent crude above $97 a barrel.
Despite near-term headwinds, many investors are betting that gold will grind higher as it rediscovers its traditional value as a portfolio hedge. The re-emergence of central-bank buying and the so-called debasement trade is reminiscent of the blistering rally that carried bullion to a record high in January.