Gold climbs as October Fed rate hike odds drop to 22 percent
Gold prices climbed on Monday as weaker-than-expected US labor market data lowered the likelihood of a Federal Reserve rate hike in October. Spot gold rose 0.4% to $4,158.17 per ounce, while US gold futures for December delivery gained 0.6% to $4,186.40. The probability of an October rate increase dropped to 22% from 64% a week earlier, according to the CME FedWatch Tool. However, markets still anticipate an 87% chance of a rate hike in December.
The Fed had raised its benchmark interest rate by 25 basis points last month to a range of 3.75%-4.00%, its first increase in three years. 'The softer labor market data has helped dial back October Fed hike expectations, which is providing gold some support,' said KCM Trade chief market analyst Tim Waterer. He noted that the broader hiking cycle remains intact, even if a pause occurs in October.
Gold, which does not pay interest, typically benefits from declining expectations for higher interest rates. Geopolitical developments in the Middle East also remained in focus, particularly after Yemen's Saudi-backed government launched a major military campaign to retake areas controlled by the Iran-backed Houthis. Waterer said these developments would continue to influence gold through their impact on oil prices and inflation.
Among other precious metals, spot silver climbed 1.7% to $61.40 per ounce. Platinum gained 0.6% to $1,708.48, while palladium rose 0.6% to $1,175.04.