Gold drops, rate hikes concerns remain

by Jonathan Adams

Gold futures dropped 1.19% to $1,742.10, with prices hitting their lowest since Mar. 31

Gold fell on Monday morning in Asia, after dropping 4.4% to a more than four-month low. Strong U.S. jobs data increased concerns that the U.S. Federal Reserve would hike interest rates and begin asset tapering earlier than expected.

After gold went below $1,750, it triggered a stop loss sale, bringing it down further to $1,684. Gold is down 5% over the course of the last month.

Gold futures dropped 1.19% to $1,742.10 by 5:20 AM GMT, with prices hitting $1,684.37, the lowest since Mar. 31, earlier in the session.

Gold broke below its bull-market defining trendline for the first time since 2019, fuelling significant stop-outs and melting the yellow metal’s prices, TD Securities analysts said in a note.

The latest U.S. jobs report, released on Friday, said non-farm payrolls rose by a better-than-expected 943,000, while the unemployment rate fell to 5.4%, in July. Investors now await further data, including the core consumer price index (CPI), on Wednesday.

The positive results have, however, raised concerns over the possibility that stimulus measures could now be rolled back.

In Asia, China also released data earlier in the day. The country’s CPI increased 1% year-on-year (YOY) and 0.3% month-on-month, while the producer price index (PPI) increased 9% year-on-year (YOY), in July.

Meanwhile, prices eased in India, where the physical gold market flipped into a small premium during the previous week for the first time in a month. However, activity remained subdued in one of gold’s biggest hubs.

In other precious metals, silver declined 2.6% at $23.70, after dropping 7.5% to a more than eight-month low of $22.50 per ounce earlier in the session. Platinum dropped 1.5% and palladium rose 0.2%.

This article is for information purposes only.
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