Gold Gains as Fed Rate Hike Expectations Dim

Gold prices edged higher on Tuesday, finding support from reduced expectations of a Federal Reserve interest-rate hike in October. Spot gold rose 0.3% to $4,152.04 per ounce by 0909 GMT, while US gold futures for December delivery climbed 0.56% to $4,180.00 per ounce. The shift in sentiment came after softer-than-expected job growth in September and revisions to earlier payroll data, which led traders to price in only a 21% chance of a rate hike this month, according to CME's FedWatch Tool.

Despite the uptick in gold, macroeconomic pressures persist. Ole Hansen, head of commodity strategy at Saxo Bank, noted that gold continues to face headwinds from rising real yields and a stronger US dollar, which makes the metal more expensive for holders of other currencies. The US 10-year and 30-year Treasury yields hit fresh 24-year highs on Monday, further weighing on investor appetite for non-yielding assets like gold.

Market focus for the week ahead is expected to remain on the US dollar, Treasury yields, and ongoing political and fiscal turmoil in the euro zone, particularly in France. Rising government debt levels and widening budget deficits across parts of the euro zone have also kept investors on edge, pushing sovereign bond yields higher.

Meanwhile, oil prices fell on Tuesday as supply concerns eased due to resilient Middle Eastern crude exports and a G7 emergency stockpile release. Geopolitical tensions in the Middle East remain, with Saudi-backed Yemeni government forces making advances against Iran-backed Houthis near the Bab el-Mandeb Strait. Among other metals, silver was flat at $61.10 per ounce, platinum eased 0.6% to $1,710.71, and palladium fell 1% to $1,160.66.