Gold Extends Losses On US Interest Rate-Hike Fears

Gold prices extended losses on Monday to their lowest point in more than two months, on fears of a US rate hike following a strong jobs report, while renewed hostilities in the Middle East pushed oil prices higher and fanned inflation concerns.

Spot gold was down 0.3% at $4,315.71 per ounce by 0725 GMT, falling to its lowest since March 23 earlier in the session. Prices fell about 3% on Friday, hitting an over two-month low.

The US gold futures for August delivery were down 0.6% at $4,341.10.

"It is all based on the hawkishness that the market has started to place on the Fed futures," said Kelvin Wong, a senior market analyst at OANDA, adding that higher Treasury yields were further pressuring gold.

The yield on the benchmark 10-year US Treasury note rose after jumping to a two-week high in the previous session, increasing the opportunity cost of holding non-yielding bullion.

Israel said it struck military targets in western and central Iran on Monday, even after U.S. President Donald Trump reportedly told Israeli Prime Minister Benjamin Netanyahu to refrain from further attacks.

Oil prices climbed more than $4 a barrel, deepening concerns over inflation and rate hikes.

While gold is seen as a hedge against inflation, higher interest rates tend to weigh on the non-yielding metal.

The US economy posted a third consecutive month of strong job gains in May, confirming the labour market was gaining traction after stumbling last year and giving the central bank more room to keep rates steady amid rising inflation due to the Iran war.

Markets are pricing in a Federal Reserve rate hike before year-end, with a 72% chance of a move by December, according to CME Group's FedWatch tool.

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Cleveland Fed President Beth Hammack said on Friday that new jobs numbers show the labour market was roughly in balance and near full employment, while continued high inflation may require the Fed to raise rates soon to contain it.

Spot silver was down 0.5% at $67.47 per ounce, platinum lost 0.6% to $1,766.70, while palladium inched 0.3% higher to $1,229. (Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)