Gold Price Drops as Fed Rate Rise Looms on US Jobs Surprise - BullionVault

AI desk brief

Gold sold off sharply after stronger-than-expected US payrolls data revived September Fed hike expectations, with bullion dropping $90/oz in minutes before stabilizing back above $4,400. Non-farm payrolls rose 162,000 versus consensus near 3x lower, while prior months were revised higher and the unemployment rate held at 4.1%. The move also pulled silver lower, briefly under $65/oz, as the dollar firmed and 10-year Treasury yields pushed back toward 4.80%.

Market pricing shifted quickly after the data: interest-rate futures lifted the odds of a September Fed hike to around 60% from roughly 50-50, and year-end 2026 rate expectations moved back near 4.00% versus the current effective Fed Funds rate of 3.63%. Fed Governor Waller reinforced the hawkish tone, saying labor conditions are solid and that hot inflation data would make him consider a hike. Gold had already been trading about $35 below Thursday’s 4-session high near $4,510 before the payroll shock accelerated the pullback.

Near term, the setup is bearish for metals if US macro data continue to firm and real yields keep rising, especially with the dollar bid and Treasury prices under pressure. The key catalyst is next inflation data: if August CPI runs hot, the market could price a more aggressive Fed path and extend liquidation across gold and silver. A softer inflation print would likely revive the recent bullish trend and re-open the focus on central-bank reserve demand and geopolitical support.