Gold slides after robust US payrolls boosts rate hike bets

Synopsis

Gold prices experienced a downturn on Friday, setting the stage for a weekly loss as solid US job data raised the bar for anticipated rate hikes by the Federal Reserve. This shift has rendered the non-yielding precious metal less desirable. Alongside gold, silver and platinum also saw drops. Investors are now keenly awaiting inflation updates for insights into policy adjustments.

Gold fell on Friday and was headed for a weekly loss after stronger-than-expected U.S. jobs data boosted expectations that the Federal Reserve could raise interest rates as soon as this month, denting non-yielding bullion's appeal.

Spot gold slipped 1.1% to $4,422.91 per ounce by 10:50 a.m. EDT (1447 GMT), putting it on track for a mild weekly decline. After ‌the data, ⁠bullion fell ⁠more than 2% to an intraday low of $4,364.99 per ounce.

U.S. gold futures for December delivery dropped ​1.5% to $4,469.80 per ounce.

U.S. 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.

"Gold stumbles ​badly as a huge headline print, and an overall ⁠strong report, ‌makes a September rate hike much more likely unless we ​get a ​weak CPI report," independent analyst Tai Wong said.

Short-term interest rate ⁠futures prices now imply about a 65% chance of an ​increase in the U.S. 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 U.S. consumer and producer price inflation data, which could provide further clues on the Federal Reserve's policy path.

"This latest jobs report follows Chair Warsh's hawkish speech at Jackson Hole and ‌appears to have cracked the door even wider for the Fed to follow through with its hiking bias, perhaps as soon as ​this month," ​said Han Tan, chief ⁠market analyst at Bybit.

"With the price stability mandate at the forefront of policymakers' minds, next week's U.S. CPI prints may yet trigger bigger moves for the precious ​metal," added Han.

Meanwhile, the U.S. dollar jumped after the report, making greenback-denominated gold more expensive for holders of other currencies. [USD/]

Among other metals, spot silver fell 1.7% to $65.79 per ounce, platinum slipped 0.8% to $1,811.83 per ounce, and palladium dropped 1.6% to $1,397.75. All three metals were headed for a weekly decline.

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