Gold holds near $4,400 amid Fed hike bets, Hormuz tensions

Gold was little changed on Monday near $4,427 an ounce, consolidating after a sharp selloff triggered by Friday's stronger-than-expected U.S. jobs report that lifted expectations for a Federal Reserve interest-rate hike at its Sept. 15-16 meeting. The precious metal faces a tug-of-war between rising borrowing costs and geopolitical risks in the Middle East, even as some of the world's largest asset managers use the pullback to rebuild positions.

Jobs Data Tilts the Fed Calculus

U.S. employers added 162,000 jobs in August while the unemployment rate held steady at 4.1%, according to the Bureau of Labor Statistics report released Friday. The data sent spot gold tumbling as much as 2% to an intraday low of $4,365 before a partial recovery, and put the metal on track for a mild weekly loss.thestar+1

Short-term interest rate futures now imply roughly a 60% to 65% chance of a rate increase at the Fed's upcoming meeting, up from about 55% before the payrolls release. "Gold stumbles badly as a huge headline print, and an overall strong report, makes a September rate hike much more likely unless we get a weak CPI report," independent analyst Tai Wong said, according to Reuters.businesstimes+1

The dollar strengthened after the report, adding another headwind for the greenback-denominated metal. All eyes now turn to U.S. consumer and producer price data due later this week, which could prove decisive for the Fed's rate decision.investing+3

Hormuz Tensions Add a Geopolitical Floor

Iran said over the weekend it targeted three oil tankers in the Strait of Hormuz along with several U.S.-linked ships, in retaliation for American attacks on vessels. Brent crude traded near $97 a barrel on Monday, fueling concerns that elevated energy costs could reinforce inflation and complicate the Fed's policy path. The escalation provided some safe-haven support for gold, limiting losses.investing+1

Big Money Buys the Dip

Despite the near-term headwinds, major fund managers have been rebuilding gold allocations. Amundi ↘ 4.57%, Europe's largest asset manager, bought bullion on expectations the metal will return to $5,000 an ounce by year-end, while Pictet Asset Management, Robeco and Fidelity International also added to holdings, according to Bloomberg. In interviews with more than a dozen managers overseeing a combined $27 trillion, every firm had either increased gold positions or maintained bullish allocations.moneyweb

"The downdraft to $4,000, if you didn't own it already, was a very good buying time," said Michael Cuggino, president of the Permanent Portfolio Family of Funds. Still, many managers cautioned that a clean break above gold's recent ceiling near $4,600 will be difficult until the Fed's rate trajectory becomes clearer.emirates247+1