Gold Climbs as Oil Drops and Fed Rate Hike Odds Decline

Gold prices climbed in early US trading on Tuesday, supported by a drop in US Treasury yields and easing oil prices. Spot gold rose 0.15% to $4,145.67 per ounce, while spot silver gained 0.40% to $60.77 per ounce. The decline in oil prices below $100 helped alleviate pressure on precious metals, contributing to their recent rebound. This followed weaker-than-expected September payrolls, which reduced expectations of a Federal Reserve rate hike in October, though inflation concerns still leave room for one more hike this year.

The likelihood of a rate hike at the Fed’s October 28 meeting stands at 22%, with markets awaiting further guidance from Fed speakers and the release of meeting minutes on Wednesday. The preliminary October consumer sentiment report, due Friday, will also be closely watched. Softer labor market or sentiment data could boost gold and silver, while rising yields may pose challenges.

Geopolitical tensions around the Strait of Hormuz persist, despite regional oil exports returning to pre-conflict levels. The Group of Seven’s decision to release 100 million barrels of oil and Saudi Arabia’s price cuts for Asian markets further increased supply. Lower oil prices may ease near-term inflation pressures, benefiting gold as yields stabilize.

Global stock markets showed positive risk appetite, with the Dow Jones up 0.46%, the S&P 500 reaching a new high of 7,835.09, and the Nasdaq Composite gaining 0.56%. European and Asian markets also saw gains, led by Japan’s Nikkei 225, which rose 1.05%. For gold, breaking above the resistance zone of $4,203.61 to $4,230.51 could push prices higher, while a drop below $4,103.52 may lead to further declines. Silver faces similar resistance and support levels.