Gold Slumps as Robust US Jobs Data Boost Rate Hike Bets

The price of gold is plummeting after a robust US jobs report led to increased expectations that the Federal Reserve could raise interest rates as soon as this month.

Spot gold fell 1.2% to $4,419.09 per ounce by 01:49 p.m. EDT (1749 GMT), putting it on track for a mild weekly decline. US job growth accelerated sharply in August while the unemployment rate held steady at 4.1%, pointing to a still stable labor market and keeping an interest rate hike from the Federal Reserve this month on the table.

Independent analyst Tai Wong said gold 'stumbles badly' after the data, which makes a September rate hike much more likely unless there is a weak CPI report. Short-term interest rate futures prices now imply about a 65% chance of an increase in the US policy rate at the Fed's September 15 to 16 meeting, up from about 55% before the Bureau of Labor Statistics report.

The focus now shifts to next week's US consumer and producer price inflation data, which could provide further clues on the Federal Reserve's policy path. Analysts say this latest jobs report has cracked the door open for a rate hike as soon as this month, with the price stability mandate at the forefront of policymakers' minds.