(RTTNews) – Gold prices fell below $4,300 an ounce on Monday as Middle East worries persisted and robust U.S. jobs data led traders to ramp up bets on a Federal Reserve rate hike this year.
Spot gold fell 0.9 percent to $4,290.78 an ounce, holding a decline after tumbling nearly 5 percent last week to its lowest level in more than two months on concerns about inflation and interest rates. U.S. gold futures were down more than 1 percent at $4,319.92.
The dollar scaled a two-month peak and the 10-year U.S. Treasury yield rose to 4.57 percent, as a stronger-than-expected jobs report reinforced expectations that the U.S. Federal Reserve may not cut borrowing costs anytime soon and that it might instead raise rates later this year against a backdrop of high inflation.
Data released on Friday showed U.S. non-farm payroll employment shot up by 172,000 jobs in May while economists had expected an addition of 85,000 jobs.
The jobless rate held steady at 4.3 percent and job figures for March and April were revised up in a sign of resilient labor market, despite economic headwinds from the Iran war.
Markets currently price in a 70 percent chance of a Fed rate hike in December, up from around 50 percent before the jobs report.
Pushing against rate-hike bets, U.S. President Donald Trump said that there is too much emphasis on inflation and that increasing the benchmark interest rate would be “the wrong thing to do”.
His remarks come as Fed Chair Kevin Warsh prepares to lead his first Federal Open Market Committee meeting on June 16-17.
Lingering Middle East concerns also dented demand for bullion. Crude prices jumped more than 4 percent, rebounding from a two-session decline after Iran and Israel exchanged missile strikes, derailing U.S. President Trump’s efforts to secure a peace deal.
Middle East peace hopes faded after Israel struck Hezbollah targets in Beirut’s southern suburbs over the weekend and Iran retaliated by launching a volley of missile strikes against Israel.
Additionally, Israel struck military targets in western and central Iran in the early hours today, dimming hopes for de-escalation and a reopening of the Strait of Hormuz.
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