Gold prices held a decline, with bullion little changed near $4,430 an ounce, after falling 1% in the previous session. This dip was primarily driven by stronger-than-expected US payrolls data, which bolstered the argument for an interest rate hike by the Federal Reserve at its September 15-16 meeting. US job growth surged in August, and the unemployment rate remained steady at 4.1%, leading traders to increase their bets on a rate hike in September to roughly a 60% likelihood, up from an even chance earlier.
The strengthening US dollar, which rose following the job data, also made gold more expensive for many international buyers, further impacting its appeal. Higher borrowing costs associated with interest rate hikes typically act as a headwind for non-yielding assets like gold. Gold has been trading within a relatively narrow range since recovering from a floor near $4,000 an ounce in July, fluctuating around $4,400 in the week leading up to September 6 as traders continuously reassessed the Fed's monetary policy outlook.
Adding to inflationary concerns and impacting gold prices were escalating geopolitical tensions in the Middle East. Iran reported targeting three oil tankers in the Strait of Hormuz, along with several US-linked ships, in retaliation for American attacks on vessels over the September 5-6 weekend. This situation raised concerns about prolonged disruptions to energy flows from the region, causing oil prices to gain on Monday. Investors are now keenly awaiting US consumer price data, due on Friday, which will provide further clues regarding the Federal Reserve's likely decision on interest rates.
