Strong US jobs report lifts dollar to two-month high and pressures gold prices

The dollar held near a two-month high on Monday after a strong U.S. jobs report increased bets that the Federal Reserve will keep, or potentially resume, raising interest rates, according to Asharq Al-Awsat. The move came as investors also sold gold, which continued to lose ground on concerns that higher U.S. borrowing costs could follow.

Markets are now focused on a pivotal week for monetary policy, with traders awaiting U.S. inflation data and the European Central Bank’s decision, as reported by Asharq Al-Awsat. Those releases could help determine whether the recent rise in the dollar extends further and how quickly central banks may move next.

The dollar’s strength reflects a sharper reassessment of the Fed’s next steps after the labor-market report signaled a still-resilient U.S. economy. That has pushed investors to price in a greater chance of tighter policy, which generally supports the currency by making dollar-denominated assets more attractive.

Gold has been one of the main casualties of that shift. As Asharq Al-Awsat reported, bullion extended its decline on Monday as the prospect of higher U.S. rates reduced the appeal of non-yielding assets such as gold.

The broader market reaction shows how closely investors are watching the balance between growth, inflation and central-bank policy. A hotter-than-expected inflation reading in the United States could reinforce expectations for tighter policy, while a softer figure might ease pressure on the Fed and give other assets room to recover.

Attention is also turning to the European Central Bank, whose decision could shape relative interest-rate expectations across major currencies. Until those data points arrive, traders are likely to remain cautious, with the dollar supported by the current view that U.S. rates may stay higher for longer.