Federal Reserve shrinks, dollar moves
Gold fell 4.4% to a more than four-month low on Monday, as strong US employment data fueled concerns about an earlier-than-expected interest rate hike , which could increase the opportunity cost of holding non-interest bearing bullion.
Spot gold was down 1.4% to $ 1,738.53 an ounce at 0406 GMT, leveling earlier losses. Prices hit $ 1,684.37, their lowest since March 31 earlier in the session, triggered by the sell stop-loss.
US gold futures slipped 1.4% to $ 1,739.00.
“Gold failed to regain the $ 1,750.00 level and the outlook remains bearish now,” said Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA.
“Friday’s nonfarm payroll data, and potentially the US infrastructure bill this week, put the Fed’s withdrawal firmly on the table before the end of the year.”
Data from the U.S. Department of Labor showed U.S. employers hired the most workers in nearly a year in July and continued to raise wages.
This underscored remarks from Fed officials suggesting an earlier-than-expected pullback of pandemic-era stimulus measures on the basis of a strong labor market recovery.
The data helped lift benchmark 10-year US Treasury yields, undermining gold’s appeal as an inflation hedge.
Meanwhile, the dollar index hit a two-week high on Monday.
“The gold metal will likely be tested in CPI data this week,” said Stephen Innes, managing partner of SPI Asset Management, adding that high inflation could increase the likelihood of an anticipated rate hike. of interest.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 1,025.28 tonnes on Friday, from 1,027.61 tonnes on Thursday.
Silver fell 7.5%, hitting a more than eight-month low at $ 22.50 an ounce earlier in the session. It was down 1.9% for the last time.
Platinum fell 0.9% to $ 971.05, after hitting a November 2020 low of $ 959.93. Palladium was stable at $ 2,626.56.