Gold climbs as U.S. debt concerns offset dollar strength
Gold prices climbed on October 5, supported by concerns over rising U.S. government debt and weakening expectations of an immediate Federal Reserve rate hike. However, gains were capped by a stronger U.S. dollar. The spot price of gold advanced 0.6% to $4,165.49 per ounce by 09:01 GMT, while U.S. gold futures for December delivery rose 0.8% to $4,194.60.
Analysts at UBS highlighted that growing government debt levels remain a long-term positive factor for gold, even as higher interest rates and a stronger dollar pose challenges. In August, U.S. debt surpassed $40 trillion for the first time, raising concerns about a potential fiscal crisis.
Investors are now closely watching the minutes of the September Federal Open Market Committee meeting to gauge the Federal Reserve’s next moves. After raising interest rates for the first time in three years last month, expectations for an October hike have dropped to 18%, though a December hike is still seen as likely at 69%. Meanwhile, the U.S. dollar index gained 0.22%, making gold more expensive for non-dollar holders.
Other precious metals also saw gains, with silver rising 2.2% to $61.7252 per ounce, platinum up 2.1% to $1,733.50, and palladium adding 1.3% to $1,182.50. Geopolitical tensions, including a major military offensive in Yemen, added to market volatility.