Gold holds near $4,400 as strong payrolls, Iran tensions lift Fed hike bets

Gold prices held close to the $4,400 mark on Monday, as U.S. employment figures exceeded expectations and heightened concerns over potential Federal Reserve rate hikes, according to the source. By 8:48 p.m. Eastern Time (12:48 a.m. Greenwich Mean Time), XAU/USD was largely trading flat at $4,426.93 an ounce, while Gold Futures saw a slight dip to $4,473.66.

Silver (XAG/USD) rose 0.2% to $66.37 an ounce, while Platinum (XPT/USD) experienced a 0.5% drop to $1,813.77. The U.S. Dollar Index slipped 0.2% to 99.09. The U.S. added 162,000 jobs in August, surpassing predictions, and the unemployment rate remained unchanged. This robust labor market fueled arguments for the Federal Reserve to raise interest rates at their forthcoming meeting on September 15-16, with markets now estimating a 60% chance of a September rate increase.

A rising rate environment typically makes income-generating assets more appealing compared to gold, adding pressure to the precious metal. The dollar also strengthened, compounding the downside risk for gold, as a more potent currency elevates the expense of buying gold priced in other currencies. This development followed a turbulent week for gold, which ended last week barely changed at $4,429, down 0.6%, after oscillating around the $4,400 level due to investors adjusting their expectations for Fed policy.

The upcoming release of U.S. consumer price data could offer additional insight into the Fed's rate decision. Iran announced it had targeted three oil tankers in the Strait of Hormuz and several ships linked to the United States, in response to American attacks on vessels over the weekend. These latest skirmishes have heightened worries about energy supplies through the vital waterway.

Brent crude traded near $97 a barrel, heightening the possibility that higher energy costs could exacerbate inflation and discourage the Fed from easing monetary policy. Gold has remained within a relatively tight range since rebounding from a low near $4,000 in July. The metal's dip below the 200-day moving average near $4,526 last week caused some short-term technical damage.

Tony Sycamore, senior market analyst at IG, stated that this breach has not altered his medium-term outlook that gold formed a base at the late June low near $3,942. He persists in recommending buying pullbacks and anticipates the metal to eventually target $5,000.