Gold flat as US data lifts aggressive Fed rate-hike bets

GOLD prices were flat on Monday (Aug 8) after solid US jobs report last week boosted the prospect of aggressive interest rate hikes by the US Federal Reserve, lifting the dollar and bond yields.

Spot gold was flat at US$1,774.09 per ounce, as of 1.21 am GMT, after dropping 1 per cent in the previous session.

US gold futures were steady at US$1,790.60.

The dollar index stood at 106.77, close to Friday's peak of 106.93, the strongest since Jul 28. A stronger greenback makes gold more expensive for other currency holders.

Benchmark US 10-year Treasury yields hovered near their highest level in more than 2 weeks scaled on Friday.

US job growth unexpectedly accelerated in July, lifting the level of employment above its pre-pandemic levels and pouring cold water on fears the economy was in recession.

The Fed should consider more 75-basis-point interest rate hikes at coming meetings in order to bring inflation back down to the central bank's goal, Fed governor Michelle Bowman said on Saturday.

Traders currently see a 73.5 per cent probability the US Fed continues the pace of 75-basis-point rate hikes for its next policy decision on Sep 21 to tame soaring inflation.

Although gold is seen as a hedge against inflation, rising US interest rates dull bullion's appeal.

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Chinese and Taiwanese warships played high seas "cat and mouse" on Sunday ahead of the scheduled end of 4 days of unprecedented Chinese military exercises launched in reaction to a visit to Taiwan by US House Speaker Nancy Pelosi.

On the physical side, gold premiums in China rose last week on safe-haven demand, driven by rising tensions with the United States over Taiwan, while higher domestic prices cooled buying activity in India.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.12 per cent to 999.16 tonnes on Friday.

Spot silver eased 0.2 per cent to US$19.83 per ounce, platinum fell 0.2 per cent to US$930, and palladium was unchanged at US$2,125.69. REUTERS