Gold Climbs Near $4,160 as Fed Rate Hike Bets Diminish
Gold prices surged near $4,160 during early Asian trading on Monday, driven by weaker-than-expected US Nonfarm Payrolls (NFP) data. The jobs report, released by the US Bureau of Labor Statistics (BLS) on Friday, showed an increase of just 29K in September, missing market expectations of 90K. This disappointing data reduced bets on US Federal Reserve (Fed) rate hikes, with the probability of a hike this month dropping to 22.1% from around 70% earlier in the week.
Analysts at UOB Group noted that gold's gains were capped by elevated real yields, with the metal reversing earlier gains to close 0.6% lower at $4,157/oz. Despite this, rising oil prices due to US-Iran tensions could fuel inflation concerns, potentially weighing on gold. Iran's Foreign Ministry spokesman and Parliament speaker both emphasized Iran's stance on the Strait of Hormuz, suggesting ongoing geopolitical risks.
On the macro front, US headline PCE rose 0.3% month-over-month in August, in line with estimates, while the year-over-year rate fell to 3.4% from 3.7%. Meanwhile, Fed official Chris Logan delivered a hawkish speech, boosting expectations for further rate hikes and supporting the US Dollar. The FXS Fed Sentiment Index rose to 136.59, indicating a sustained tightening bias.
Technically, gold remains in a bearish near-term bias, trading below the 100-day simple moving average (SMA) and the Bollinger middle band. Immediate support is at $4,102.30, while resistance lies at $4,275. A break below support could signal a deeper correction.