Gold Tumbles as Strong US Jobs Data Reinforce Rate Hike Bets

Gold prices retreated on Monday as strong US job data reinforced expectations of higher interest rates. The U.S. gold futures for December delivery fell 0.5% to $4,452.20, while spot gold dropped 0.5% to $4,405.47 per ounce.

The robust jobs numbers in August, which showed a sharp acceleration in job growth and an unchanged unemployment rate of 4.1%, added pressure on the metal. However, market participants are still awaiting key US inflation prints due later this week for further clarity on the Federal Reserve's policy path.

Tim Waterer, chief market analyst at KCM Trade, noted that a strong inflation print would reinforce expectations of a Fed hike, lift yields further, and weigh more heavily on gold. The traders are currently pricing in a 58.4% chance of a rate hike at the Fed's September 15-16 meeting.

Ahead of the inflation data, U.S. President Donald Trump stated that unless the Fed cuts interest rates, he would stop trading with countries having a deficit with the United States. Meanwhile, Iran announced it will step up efforts to tackle problems created by US sanctions crippling its economy, while a senior Iranian official warned of a 'painful response' if it comes under further attack.