Gold Price Sinks Near Two-Week Low Amid US Jobs Data Fears
Gold prices hovered near their lowest level in almost two weeks on Tuesday as traders focused on the upcoming US labor market calendar, which could influence the Federal Reserve's decision to raise interest rates in September.
The spot gold price traded around $4,450 an ounce in Asian hours after touching its lowest point since August 19 on Monday. This decline comes after Fed Chair Kevin Warsh used Jackson Hole to warn that policymakers may need to tighten again if inflation fails to move convincingly towards 2%.
Markets now put the probability of a September increase at about 66%, with the first test coming later Tuesday with July's JOLTS job-openings report, due at 10 am ET. The ADP private-payroll report follows on Wednesday, before the official August employment report arrives Friday at 8:30 am ET.
FXStreet analyst Dhwani Mehta sees $4,400 as an increasingly important near-term battleground, with technical assessments putting the 21-day moving average near $4,430 and the 100-day average around $4,366. A recovery through the 200-day average near $4,531 would strengthen the bullish setup again.
Warsh's Jackson Hole message changed the way markets are approaching bullion, with September no longer being treated as an easy hold. Investors are debating whether the Fed may need to resume tightening, and CME pricing showed roughly a 66% probability of a September increase on Monday, up sharply from a week earlier.
Barclays expects two quarter-point increases before year-end, in September and December. IG market analyst Tony Sycamore said that a single rate increase would probably not fundamentally undermine gold's longer-term case, but a sequence of two or three could become much more damaging, given gold generates no income.
Renewed US-Iran fighting is offering safe-haven support to gold, but it is simultaneously pushing oil and inflation expectations higher. Brent climbed above $91 a barrel on Tuesday after Washington and Tehran exchanged direct attacks for the first time in about a month.