Gold Prices Tumble as Strong Employment Data Boosts Rate Hike Expectations
The US nonfarm payroll report for August showed a significant jump of 162,000 jobs, exceeding market expectations by nearly three times. This robust employment data reinforced speculation about a potential Federal Reserve rate hike in September, putting downward pressure on gold prices.
Last Friday's release sparked a sharp decline in spot gold, with prices plummeting more than 2%. The US dollar index also strengthened, making gold more expensive for investors holding other currencies. Two-year Treasury yields reached their highest level since January 2025, while 10-year yields rose significantly.
The market is now focused on this week's key inflation data, specifically the Producer Price Index (PPI) and Consumer Price Index (CPI). Economists predict a slowdown in core CPI year-over-year growth from 2.5% in July to 2.4%. If the data confirms cooling inflation, it may ease pressure on gold prices.