Gold held near $4,400 an ounce on Monday as a stronger than expected August jobs report and renewed attacks in the Strait of Hormuz raised bets on a Federal Reserve rate hike as soon as next week. The metal traded largely flat while silver and platinum posted modest moves, and traders now watch this week's consumer price data for the next signal on Fed policy.
Gold traded largely flat at $4,426.93 an ounce at 20:48 ET on Monday, while gold futures slipped marginally to $4,473.66. Silver rose 0.2% to $66.37 an ounce, and platinum fell 0.5% to $1,813.77. The US Dollar Index fell 0.2% to 99.09.
Strong payrolls keep Fed hike bets elevated
U.S. employers added 162,000 jobs in August, topping expectations, while the unemployment rate held steady. The stronger labor market reading bolstered the case for the Fed to raise interest rates at its September 15 to 16 meeting.
Markets are now pricing about a 60% probability of a September rate hike. When rates rise, income generating assets become more attractive relative to holding the metal. The dollar also strengthened on Friday, adding another headwind for gold because a stronger greenback makes dollar priced bullion more expensive for buyers using other currencies.
The latest move follows a volatile week. Gold finished last week little changed at $4,429, down 0.6%, after trading on both sides of $4,400 as investors repeatedly adjusted their expectations for Fed policy. Investors now turn to U.S. consumer price data due later this week, which could provide another important signal for the Fed's rate decision.
Hormuz attacks revive energy and inflation risks
Iran said it had targeted three oil tankers in the Strait of Hormuz, along with several ships linked to the United States, in retaliation for American attacks on vessels over the weekend. The latest skirmishes have raised fresh concerns about energy flows through the strategic waterway.
Brent crude was trading near $97 a barrel, adding to the risk that higher energy costs could reinforce inflation pressures and make the Fed more reluctant to ease policy. Gold has remained in a relatively narrow range since rebounding from a floor near $4,000 an ounce in July, though the metal's decline below the 200-day moving average near $4,526 last week caused some short term technical damage.
Tony Sycamore, senior market analyst at IG, said that break has not changed his medium term view that gold formed a base at the late June low near $3,942. He continues to favor buying pullbacks and expects the metal to eventually push toward $5,000.
Source: Investing.com
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