Gold Prices Steady Near $4,400 as Strong Jobs Data, Mideast Tensions Fuel Fed Hike Bets

Gold prices held steady near $4,400 per ounce on Monday, caught between pressure from a stronger-than-expected U.S. jobs report and support from rising geopolitical tensions in the Middle East. The developments have intensified market expectations for a Federal Reserve interest rate hike as soon as next week.

As of 8:48 PM ET, spot gold (XAU/USD) was largely unchanged at $4,426.93 per ounce, while gold futures edged lower to $4,473.66, according to Investing.com data. Other precious metals were mixed, with spot silver rising 0.2% to $66.37 per ounce and platinum falling 0.5% to $1,813.77.

Jobs Data Bolsters Rate Hike Case

The primary headwind for gold came from U.S. labor market data, which showed the economy added 162,000 jobs in August, surpassing market forecasts. The strong report has reinforced the rationale for the Federal Reserve to raise interest rates at its upcoming meeting on September 15-16.

Market-implied odds for a September rate hike have now climbed to approximately 60%. Higher interest rates typically weigh on non-yielding assets like gold by increasing the opportunity cost of holding the metal. The U.S. dollar, which strengthened on Friday following the data, exerted additional pressure by making gold more expensive for holders of other currencies.

Geopolitical Risks Offer Support

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Countering the pressure from rate expectations, new tensions in the Strait of Hormuz are providing a floor for gold prices. Iran claimed it attacked three oil tankers and several U.S.-related vessels in the key shipping lane, stoking fears of a disruption to global energy supplies.

The incident has pushed Brent crude oil prices near $97 per barrel, fueling concerns about resurgent inflation. This could complicate the Federal Reserve's policy decisions, as sustained energy-driven inflation might force it to maintain a more restrictive stance. Investors are now closely watching this week's U.S. consumer price data for further clues on inflation trends.

Market Outlook

Gold has traded within a relatively tight range after rebounding from lows near $4,000 an ounce in July. Last week, the price broke below its 200-day moving average of around $4,526, a development seen as a negative short-term technical signal.

However, Tony Sycamore, a senior market analyst at IG Group, stated that the break does not alter his medium-term view that gold established a bottom around $3,942 in late June. Sycamore indicated a preference for buying on dips, anticipating an eventual move toward the $5,000 level.