Gold prices edged lower in international markets on Monday as expectations grew that the US Federal Reserve could raise interest rates later this month following stronger-than-expected employment data. Investors are also turning their attention to key inflation figures due later this week, which could provide fresh clues about the direction of US monetary policy.
By 2:35pm Bangladesh time on Monday, 7 September, spot gold had fallen 0.2 per cent to $4,421.04 an ounce. US gold futures for December delivery also declined 0.2 per cent to $4,466.90 an ounce. Trading activity was relatively subdued because of a public holiday in the United States.
The latest movement reflects a shift in market expectations after the release of stronger US employment figures on Friday. The data suggested that the American labour market remained relatively resilient, prompting investors to reassess the likely path of interest rates.
Ole Hansen, head of commodity strategy at Saxo Bank, said US bond yields had risen following the employment report, while expectations of a possible rate increase at the Federal Reserve’s 16 September meeting had also strengthened. Gold and silver subsequently came under pressure, moving in the opposite direction to energy prices.
Gold’s performance is closely linked to expectations surrounding interest rates and bond yields. Unlike interest-bearing assets such as government bonds, gold does not generate regular income. When interest rates and bond yields rise, holding gold can therefore become comparatively less attractive to investors seeking returns.
Hansen said buyers had emerged after gold briefly fell below $4,400 an ounce twice during Monday’s trading. The area around $4,320 is being watched as an important support level, while a move above $4,500 could trigger renewed selling pressure, according to his assessment.
US labour-market figures released last week showed a notable increase in employment growth during August, while the unemployment rate remained unchanged at 4.1 per cent. The combination of stronger employment growth and a steady unemployment rate has added to speculation that the Federal Reserve may have less urgency to ease monetary policy.
Market expectations have shifted accordingly. Data from the CME FedWatch tool showed that traders were pricing in a 58 per cent probability of an interest-rate increase at the Federal Reserve’s policy meeting next week, up from 50 per cent before the employment figures were released.
The focus has now moved to the latest US inflation indicators. The producer price index is due on Thursday, followed by the consumer price index on Friday. Both reports could have a significant bearing on expectations for the Federal Reserve’s next decisions. A stronger-than-expected inflation reading could reinforce expectations of tighter monetary policy, while softer price pressures could revive expectations of a more accommodative stance.
Energy markets are adding another layer of uncertainty. Oil prices rose after reciprocal attacks over the weekend involving shipping activity. Iran has also said it plans to announce a map within the next few days for a new controlled area in the Gulf and a new maritime route through the Strait of Hormuz. Such developments have raised concerns about energy supplies, transport routes and the potential impact on global inflation.
Gold is traditionally regarded as a hedge against inflation and a store of value during periods of economic or geopolitical uncertainty. However, its appeal can weaken when interest rates rise because investors have greater opportunities to earn returns from interest-bearing assets.
US President Donald Trump, meanwhile, said on Friday that he could consider halting trade with countries that run trade surpluses with the United States if the Federal Reserve does not cut interest rates. Trump has previously pressed the central bank to lower borrowing costs, adding another political dimension to the debate over US monetary policy.
Other precious metals showed mixed performances. Spot silver fell 0.2 per cent to $66.06 an ounce. Platinum, however, gained 0.3 per cent to $1,825.21 an ounce, while palladium rose 1.1 per cent to $1,401.84.
For gold investors, the immediate focus remains on the US inflation data and the Federal Reserve’s interest-rate outlook. Labour-market resilience, inflation trends, Treasury yields and geopolitical risks are likely to remain key drivers of precious-metal prices in the days ahead.
