Gold prices steady as markets await US inflation data

Gold prices slipped on Monday as strong U.S. job figures bolstered predictions for higher interest rates, while traders awaited crucial U.S. inflation reports later in the week for additional insight into the Federal Reserve’s monetary policy direction. Spot gold fell 0.5% to $4,405.47 per ounce, after dropping 1% on Friday. U.S. gold futures for December delivery slipped 0.5% to $4,452.20.

On Friday, U.S. job growth surged in August, while the unemployment rate remained unchanged at 4.1%, indicating an improving labor market after recent setbacks and hinting at a potential rate hike this month. U.S. producer price index (PPI) data is set for release on Thursday, followed by consumer price index (CPI) figures on Friday.

Tim Waterer, chief market analyst at KCM Trade, noted that the robust jobs data provided a clear upside surprise, adding pressure to the precious metal but was not a definitive sign of a September rate increase. The biggest uncertainty remains the upcoming U.S. CPI data, which could solidify expectations of a Federal Reserve rate hike, intensify the appeal of higher-yielding assets, and put additional downward pressure on gold.

Current market sentiment prices the likelihood of a September rate hike at 58.4%, according to CME’s FedWatch tool. Although gold is frequently considered an inflation safeguard, higher interest rates typically diminish the attractiveness of non-yielding bullion. President Donald Trump tweeted on Friday, stating that if the Fed fails to lower interest rates, he would cease trading with countries facing a trade deficit.

On the regional front, Iran pledged to intensify efforts to address issues stemming from U.S. sanctions that are straining its economy, while a senior Iranian official threatened a "painful response" should the country face further aggression. Among other commodities, spot silver slipped 0.2% to $66.03 per ounce, platinum declined 0.8% to $1,805.53, and palladium fell 0.7% to $1,396.08.