Gold futures on the New York market closed lower on Monday (Aug. 31) as investors worried that the Fed might raise interest rates in September after Kevin Warsh, the Fed chair, signaled a tightening of monetary policy. COMEX gold for December delivery fell $48.40, or 1.07%, to settle at $4,481.50 per ounce. Meanwhile, the CME Group's FedWatch Tool indicated that investors assign a 64% probability that the Fed will raise interest rates at its September meeting, up from 36% before Warsh's speech at Jackson Hole. Additionally, the surge in WTI and Brent crude oil prices of more than 2.5% following the U.S. attack on Iran's rocket launchers on Larak Island, and Iran's retaliation by attacking a U.S. base in Jordan, also pressured the gold market. Investors are now focusing on the U.S. nonfarm payrolls data due on Friday (Sept. 4), which analysts expect to show an increase of 58,000 jobs in August, after a decline of 23,000 jobs in July, with the unemployment rate expected to hold steady at 4.1%.
Fed chair signals rate hike, raising policy rate expectations.
Rate hike expectations push bond yields up, lowering bond prices.
