Gold prices fell as the non-farm payroll data boosted bets on a Fed interest rate hike.

The price of gold has dropped significantly, as strong U.S. employment data boosted market expectations of a possible rate hike by the Federal Reserve this year, which has a negative impact on gold. The price of gold fell by as much as 2.5%, as the latest U.S. nonfarm payroll numbers for May exceeded all expectations, leading to higher bond yields and a stronger U.S. dollar. Amid tensions in the Middle East pushing up energy prices, the strong performance of the labor market provides room for Fed officials to raise rates. Rising interest rates are usually unfavorable for non-interest bearing assets like gold. Elias Haddad of Brown Brothers Harriman & Co. said, "Gold is facing a double negative of rising real yields and a stronger dollar." Haddad noted that breaking below the 200-day moving average, a measure of long-term momentum, signals further downside risk. Traders have already priced in a 25-basis-point rate hike by the Fed in December, with a 60% chance of a hike in October. Prior to the data release, they had expected the policymakers' next move to be a rate hike in March. Fed officials will meet on June 16-17 under the leadership of new Chair Kevin Warsh.