Gold slides after robust US payrolls boost rate hike bets

Gold fell on Friday and was headed for a weekly loss after stronger-than-expected U.S. jobs data boosted expectations that the Federal Reserve could raise interest rates as soon as this month, denting non-yielding bullion's appeal.

Spot gold XAU= slipped 1.2% to $4,419.09 per ounce by 01:49 p.m. EDT (1749 GMT), putting it on track for a mild weekly decline. After the data, bullion fell more than 2% to an intraday low of $4,364.99 per ounce.

U.S. gold futures GCcv1 for December delivery dropped 1.4% to settle at $4,476.60 per ounce.

U.S. job growth accelerated sharply in August while the unemployment rate held steady at 4.1%, pointing to a still stable labor market and keeping an interest rate hike from the Federal Reserve this month on the table.

"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.

Short-term interest rate futures prices now imply about a 65% chance of an increase in the U.S. policy rate at the Fed's September 15 to 16 meeting, up from about 55% before the Bureau of Labor Statistics report.

Among other metals, spot silver XAG= fell 1.7% to $65.83 per ounce, platinum XPT= slipped 0.8% to $1,810.96 per ounce, and palladium XPD= dropped 2.5% to $1,385.50. All three metals were headed for a weekly decline.

The focus now shifts to next week's U.S. consumer and producer price inflation data, which could provide further clues on the Federal Reserve's policy path.

"This latest jobs report follows Chair Warsh's hawkish speech at Jackson Hole and appears to have cracked the door even wider for the Fed to follow through with its hiking bias, perhaps as soon as this month," said Han Tan, chief market analyst at Bybit.