Investing.com - Gold prices slumped to a one-week low in European trade on Monday, amid resurgent expectations of a U.S. interest rate hike by the end of this year.
Gold for December delivery on the Comex division of the New York Mercantile Exchange fell to a session low of $1,337.00 a troy ounce, the weakest since July 29. It was last at $1,339.55 by 06:59GMT, or 2:59AM ET, down $4.85, or 0.36%.
On Friday, gold sank $23.00, or 1.68%, after data showed the U.S. economy created more jobs than expected in July, raising the probability of an interest rate hike from the Federal Reserve in the coming months.
The U.S. economy added 255,000 jobs last month, well above expectations for 180,000, the Labor Department said on Friday. June’s number was revised up to 292,000 jobs compared with the previous estimate of 287,000.
Meanwhile, the unemployment rate held steady at 4.9%, as more people entered the labor market.
The report also showed that average hourly earnings rose month-on-month by 0.3%, beating expectations for a 0.2% gain. They were up 2.6% on the year.
The upbeat data reignited speculation that the Federal Reserve will lift interest rates this year. Fed funds futures are currently pricing in a 15% chance of a rate hike by September. December odds were at around 44%, up from 33% ahead of the report.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, surged to a one-week high of 96.50 in wake of the jobs report on Friday. It was at 96.27 early Monday.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The yellow metal flirted with a more than two-year high above the $1,370-level less than a week ago as a string of disappointing U.S. economic data prompted market players to push back expectations for the next U.S. rate hike.
Gold is sensitive to moves in U.S. rates. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
For the year, the precious metal is up nearly 26%, boosted by concerns over global growth and expectations of monetary stimulus.
Also on the Comex, silver futures for September delivery shed 15.4 cents, or 0.78%, to trade at $19.66 a troy ounce during morning hours in London, while copper futures tacked on 1.3 cents, or 0.6%, to $2.167 a pound.
Monthly trade data released earlier showed that both Chinese exports and imports fell in July, underlining concerns over the health of the world’s second largest economy.
Exports slumped 4.4% from a year earlier, worse than forecasts for a decline of 3.0%, while imports dropped 12.5%, compared to expectations for a fall of 7.0%. That left China with a surplus of $52.3 billion last month, the General Administration of Customs said.
China is the world’s largest copper consumer, accounting for nearly 45% of world consumption.