Gold Climbs as October Fed Rate Hike Odds Shrink
Gold prices edged higher on Monday as recent weaker economic data reduced the likelihood of a Federal Reserve rate hike in October, boosting demand for the non-interest-bearing asset. Spot gold rose 0.4% to US$4,158.17 per ounce by 0150 GMT, while US gold futures for December delivery climbed 0.6% to US$4,186.40.
The shift in sentiment followed Friday's disappointing US jobs report, which showed slower-than-expected job growth in September and significant downward revisions for the previous two months. Tim Waterer, chief market analyst at KCM Trade, noted that the softer labor market data had lowered expectations of an October rate hike, providing some support for gold. However, he cautioned that markets still anticipate further rate increases beyond October.
Traders now see only a 22% probability of a Fed rate hike in October, down from 64% a week ago, though they still price in an 87% chance of a December increase, according to the CME FedWatch Tool. The US central bank had raised its benchmark rate to the 3.75%-4.00% range last month, its first hike in three years.
Geopolitical tensions in the Middle East also remained a factor, with Yemen's Saudi-backed government announcing a major military campaign against Iran-backed Houthis. Waterer highlighted that developments in the region could influence gold prices through their impact on oil markets and inflation expectations. Meanwhile, US oil prices dipped as rising exports from the Middle East and G7 oil releases added to global supplies.
Other precious metals also saw gains, with spot silver up 1.7% to US$61.40 per ounce, platinum rising 0.6% to US$1,708.48, and palladium firming 0.6% to US$1,175.04.