US Employment Data Exceeds Expectations, Sending Gold Prices Down
Gold prices dropped on Monday as the US non-farm payroll data exceeded expectations, driving up the probability of a Fed rate hike in September to 58.3%. The strong employment numbers put pressure on gold, with spot gold trading near $4,400/ounce.
The immediate catalyst for this latest gold drop comes from the latest U.S. employment data, which showed non-farm payrolls increased by 162,000 in August, significantly higher than market expectations of 56,000 and July's increase of 21,000.
Independent analyst Tai Wang believes that the strong employment report has significantly increased the likelihood of a rate hike in September, and unless the upcoming U.S. consumer price data is weak, gold may still be under pressure in the short term.
However, the market cannot determine the Fed's policy path solely based on one employment report. This week's US PPI and CPI will become the new key variables. If producer and consumer price rises reaccelerate, the market may bet on the Fed maintaining or even strengthening its hawkish stance, supporting the dollar and U.S. Treasury yields further.