Gold Slumps After Surprisingly Strong US Jobs Report
Gold prices dropped on Monday after a strong US jobs report revived expectations that the Federal Reserve could raise interest rates this month. The August employment figures showed employers added 162,000 jobs in August, well above market expectations. This improvement reduced concerns that tighter monetary policy was already causing damage to the labor market.
The jobs report changed the near-term policy calculus for the Fed, leaving them with more room to focus on inflation. Futures markets were assigning a 58% probability to a rate increase at the September 15-16 meeting.
Peter Grant, senior metals strategist at Zaner Metals, stated that persistently firm inflation data this week could strengthen expectations for another Fed increase, putting additional pressure on gold.
Gold's longer-term support remains intact, particularly due to ongoing tensions between the US and Iran. Higher oil prices can boost safe-haven demand but also strengthen inflation expectations and encourage central banks to keep rates higher.