Fed Hike Bets and Iran Tensions Weigh on Gold Prices

Gold prices remained under pressure on Monday for the second consecutive day, as investors weighed in on the US Federal Reserve's potential interest rate hike and the escalating tensions between the US and Iran.

The release of the August US Nonfarm Payrolls (NFP) report showed that the economy added 162K new jobs, surpassing consensus estimates by a wide margin. This news, combined with higher energy prices and inflation risks, contributed to increasing bets on an interest rate hike later this month. As a result, the US Dollar saw support from investors, which in turn put pressure on gold prices.

According to TD Securities, the latest data reinforces the view that the US labor market remains resilient. They argue that when combined with a private sector looking up from a jobs perspective, it suggests the labor market is in a good place and possibly improving.

The widening US-Iran confrontation in the Strait of Hormuz added to geopolitical risks and underpinned the safe-haven buck, supporting oil prices and fueling inflation fears. This environment favors USD bulls, prompting caution before placing fresh bullish bets on gold prices.