Gold slips on rate-hike bets; US inflation data in focus

Gold slipped on Monday, as strong U.S. jobs data reinforced expectations for higher interest rates, while investors awaited key inflation reports from the world's largest economy due this week for further clarity on the Federal Reserve's policy path.

Spot gold XAU= was down 0.7% at $4,398.13 per ounce, as of 0710 GMT, after falling 1% on Friday.

U.S. gold futures GCcv1 for December delivery were down 0.7% at $4,443.60.

U.S. job growth accelerated sharply in August, data showed on Friday, while the unemployment rate held steady at 4.1%. The labour market's improvement after recent struggles kept a rate increase this month on the table.

The country's producer price index (PPI) data is due on Thursday, while the consumer price index (CPI) data is scheduled for Friday.

"The jobs number delivered a clear upside surprise and put some pressure on the metal, but it wasn't a complete slam dunk for a September rate hike. The real missing piece of the puzzle arrives this week with U.S. CPI," said Tim Waterer, chief market analyst at KCM Trade.

"A strong inflation print would reinforce expectations of a Fed hike, lift yields further and weigh more heavily on gold." US/

Traders are pricing in a 58.4% chance of a rate hike at the Fed's September 15-16 meeting, CME's FedWatch tool showed, higher than the 55% before Friday's data.

While gold is typically viewed as an inflation hedge, higher interest rates tend to weigh on the appeal of non-yielding bullion.

President Donald Trump said on Friday that unless the Fed cuts interest rates, he would stop trading with countries with which the U.S. had a deficit.

On the Middle East front, Iran said it will step up efforts to tackle problems created by U.S. sanctions that are crippling its economy, while a senior Iranian official warned of a "painful response" if it came under further attack.