Gold Dips as Dollar Strengthens Amid Reduced Fed Hike Expectations

Gold prices dipped on Monday as the US dollar strengthened, though losses were kept in check by recent weak economic data that has lowered expectations of a Federal Reserve rate hike in October. Spot gold fell 0.3% to $4,131.61 per ounce by 0422 GMT, while US gold futures for December delivery dropped 0.1% to $4,159.30.

The US dollar index rose 0.6%, making dollar-denominated metals more expensive for holders of other currencies. Recent data showed slower-than-expected job growth in September, along with significant downward revisions to nonfarm payrolls for the prior two months.

Tim Waterer, chief market analyst at KCM Trade, noted that the softer labor market data has reduced the likelihood of an October Fed hike, providing some support to gold. However, the market still anticipates a broader hiking cycle, even if a pause occurs in October.

Traders now see an 18% probability of a Fed rate hike in October, but an 88% chance of an increase in December, according to the CME FedWatch Tool. The US central bank last raised its benchmark overnight interest rate by 25 basis points to the 3.75%-4.00% range in its first hike in three years.

Meanwhile, oil prices slipped due to rising crude exports from the Middle East and G7 nations' release of oil, offsetting concerns about further damage to Gulf oil. Other metals saw mixed movements, with spot silver up 0.9% to $60.94, platinum rising 0.5% to $1,706.18, and palladium falling 0.2% to $1,165.40.