Gold is heading for the first monthly decline since May as investors price in the prospect of higher U.S. borrowing costs by the end of the year and slowing purchases of bullion-backed exchange-traded funds. Bullion for immediate delivery is at around $1,315 an ounce but dropped to $1,309 on Tuesday, the lowest level since June 28, and is down 2.7 percent this month, Bloomberg reported.
Gold’s drop this month would be the first for August since 2009, as the metal generally climbs on jewelry demand ahead of the wedding and festival season in India, the top consumer along with China. The pullback has followed hawkish comments by Federal Reserve officials, which have increased bets on an interest rate rise which has strengthened the dollar.
Investors are now looking to Friday’s nonfarm payrolls report to shed further light on the strength of the U.S. economy and the timing of a rate hike. Traders believe there is a 34 percent probability the Fed will move next month, while odds of an increase in December are at 59 percent.