Gold Prices Plummet as Strong US Jobs Data Boost Rate Hike Expectations

The price of gold (XAU/USD) plummeted to nearly $4,395 during early European trading on Monday. The sharp decline came as robust US employment data boosted expectations for a Federal Reserve rate hike. August's Nonfarm Payrolls (NFP) rose by 162K, surpassing market predictions of 56K and exceeding July's increase of 21K.

Independent analyst Tai Wong noted that 'gold stumbles badly' in the face of strong US jobs data, making a September rate hike more likely unless inflation reports are weak. Markets now price in a roughly 58.3% likelihood of a rate hike, up from an even chance earlier in the session.

Escalating tensions in the Middle East have also contributed to gold's decline, as Bloomberg reported Iran targeting oil tankers through the Strait of Hormuz. This development could stoke inflation fears and further erode gold's appeal.