Gold declines as stronger US payrolls data raises rate hike prospects

Gold just had a rough day at the office. Spot prices tumbled as much as 2.4% on Thursday, settling near $4,400 per ounce after the Bureau of Labor Statistics dropped an August employment report that made the labor market look a lot healthier than anyone expected. The culprit: US nonfarm payrolls surged by 162,000 in August, roughly tripling the consensus forecast of 53,000 to 65,000. The numbers behind the selloff The unemployment rate held steady at 4.1%, suggesting the labor market isn’t softening the way some economists had predicted. Prior months got revised upward too, with June gaining an additional 31,000 jobs and July adding 21,000 more than previously reported. Wage growth came in measured but persistent. Average hourly earnings climbed 0.3% month-over-month and 3.1% year-over-year, according to the BLS. The immediate market mechanics were textbook. Treasury yields climbed on the stronger data, the US dollar strengthened, and gold, which pays no yield and is priced in dollars, took it on the chin from both directions simultaneously. Rate hike odds shift meaningfully Markets are now pricing in roughly a 60% probability that the Federal Reserve will raise interest rates at i...