Spot gold experienced a notable decline, slipping 1.2% to $4,419.09 per ounce by 01:49 p.m. EDT. This put it on track for a mild weekly decrease. Following the release of robust US jobs data, bullion fell more than 2% to an intraday low of $4,364.99 per ounce. December U.S. gold futures also saw a drop of 1.4%, settling at $4,476.60 per ounce.
The decline in gold prices is directly linked to an acceleration in U.S. job growth in August and a stable unemployment rate of 4.1%. This data has strengthened the market's expectation for a Federal Reserve interest rate hike in September. Short-term interest rate futures now imply approximately a 65% probability of an increase in the U.S. policy rate at the Fed's September 15-16 meeting, up from about 55% before the Bureau of Labor Statistics report. This increased likelihood of a rate hike makes gold, which does not offer interest, less attractive to investors, especially as the U.S. dollar has also jumped, making gold more expensive for holders of other currencies.
Analysts are keenly focused on upcoming U.S. consumer and producer price inflation data, which will provide further clarity on the Federal Reserve's policy direction. Independent analyst Tai Wong noted that a strong jobs report makes a September rate hike much more likely unless a weak CPI report emerges. Han Tan, chief market analyst at Bybit, added that the latest jobs report, coupled with Chair Warsh's hawkish speech, has made a Fed hike this month more probable, emphasizing that next week's U.S. CPI prints could trigger significant moves for the precious metal.
