Gold Holds Decline as Traders Weigh Prospects for Fed Rate Hike

(Bloomberg) -- Gold held a decline, after stronger-than-expected US payrolls data raised the prospects for an interest-rate hike as early as next week.

Bullion was little changed near $4,430 an ounce, after falling 1% in the previous session. US job growth surged in August and the unemployment rate held steady, according to numbers published Friday, bolstering the argument for raising rates at the Federal Reserve's Sept. 15-16 meeting.

A gauge of the dollar rose, making gold that's priced in the US currency more expensive for many buyers. Traders also dialed up bets on a rate hike in September, pricing in a roughly 60% likelihood versus an even chance earlier in Friday's session. Higher borrowing costs are typically a headwind for non-yielding bullion.

Gold has settled in a relatively narrow range since bouncing back from a floor near $4,000 an ounce in July. The metal swung either side of $4,400 last week as traders repeatedly reassessed the outlook for the Fed's monetary policy. Consumer price data due later this week will provide clues to the central bank's likely decision on rates.

Adding to inflationary fears, escalating tensions in the Middle East have raised fresh concerns about prolonged disruptions to energy flows from the region. Iran said it targeted three oil tankers in the Strait of Hormuz, as well as a number of US-linked ships, in retaliation for American attacks on vessels over the weekend. Oil prices gained on Monday.

Spot gold was 0.1% lower at $4,426.67 an ounce at 7:25 a.m. in Singapore. Silver fell 0.1% to $66.17 an ounce. Platinum was down, while palladium edged higher. The Bloomberg Dollar Spot Index was little changed, after adding 0.1% on Friday.